Intel’s efforts to stage a turnaround took a hit this week as the tech giant’s stock plunged 9%, despite beating Wall Street expectations on quarterly earnings. The drop came after Intel disclosed a dramatic shift in its chip foundry strategy — a move that signals rising uncertainty around one of its most ambitious bets in recent years.
Strong Numbers, Weak Confidence
Intel’s second-quarter earnings showed signs of progress. The company reported adjusted earnings of $0.10 per share — comfortably ahead of analyst expectations, which hovered around $0.01. Revenue and Q3 guidance also topped forecasts. But investor optimism quickly gave way to broader strategic concerns.
In a regulatory filing, Intel revealed that it may pause or exit its foundry business altogether if it fails to lock in a lead customer for its upcoming “Intel 14A” manufacturing node. Despite significant investments, the company admitted it has yet to attract any major external foundry clients — a critical element for the unit’s viability.
The sobering admission overshadowed Intel’s financial performance and reflected mounting doubts over its competitive positioning, particularly in the high-stakes AI and semiconductor ecosystem increasingly dominated by Nvidia and TSMC.
CEO Lip-Bu Tan’s Strategic Reset
Newly appointed CEO Lip-Bu Tan, who took over in March, has wasted no time in recalibrating Intel’s vision. In an internal memo, he stressed a stricter discipline on capital expenditure: no more “blank checks,” and all new manufacturing processes — including the 14A node — will move forward only with confirmed customer demand.
“We’ve invested too heavily, too early, and now we’re paying the price,” Tan wrote. “Our manufacturing footprint became fragmented and underutilized.”
As part of the overhaul, Intel is scrapping planned facilities in Germany and Poland, while slowing development at its Ohio mega-fab. Layoffs have also accelerated, with Intel now targeting a 15% reduction in headcount, ending 2025 with approximately 75,000 employees.
A Pivotal Crossroads
Intel’s foundry ambitions were meant to break TSMC’s monopoly and transform the company into a contract manufacturing powerhouse. But without a marquee client — and with broader skepticism from the market — that vision is now under threat.
Analysts at Barclays noted the growing trust gap: “Without external customer commitments, advancing the node adds uncertainty to Intel’s roadmap — and makes adoption even less likely.”
Others, like JPMorgan Chase, viewed the foundry pullback as a “constructive course correction,” suggesting that disciplined capital reallocation could help stabilize Intel’s core business. Still, the broader challenge remains: Intel is losing ground in the markets that matter — particularly AI.
Where Intel Stands Now
- Net loss for the quarter widened to $2.9 billion, up from $1.61 billion a year ago.
- The company also recorded an $800 million impairment tied to excess manufacturing equipment.
- Intel’s stock has now erased most of its gains for 2025, capping a multi-year slide that has seen it lose over 60% of its market value.
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IMAGE: AP
