Intel continues to pull back on its manufacturing projects

Intel CEO Lip-Bu Tan is making progress on his plan for the company to shed its inefficiencies. And that includes spiking several manufacturing projects.

The semiconductor giant reported Thursday in its second-quarter earnings report that it will delay, and in some cases not move forward with, multiple manufacturing projects. Specifically, Intel said it was no longer going forward with its previously announced projects in Germany and Poland. Those projects included an assembly and testing facility in Poland and a chip factory in Germany. Both projects have been sitting in limbo since being suspended in 2024, shortly after being announced.

The company also plans to consolidate its test operations in Costa Rica and concentrate these operations to its sites in Vietnam and Malaysia.

“Unfortunately, the capacity investment we make over the last several years were well ahead of demand and were unwise and excessive,” Tan said on the company’s second-quarter earnings call. “Our factory footprint has become needlessly fragmented. Going forward, we will grow our capacity based solely on the volume commitments and deploy capex lockstep with the tangible milestones, and not before.”

Intel also said it was going to further delay its $28 billion Ohio chip factory. The factory was initially supposed to open in 2025 and was already delayed once this year in February.

The second quarter was the first full quarter with Tan at the helm of Intel. He was named CEO of the semiconductor company on March 12 and started the role a week later. Shortly after, Tan said his plan was to eliminate inefficiencies at the company by selling off its noncore units and streamlining operations.

“We have much work to do in building a clean and streamlined organization, which we have started in earnest, and it remain an area of focus for me during Q3,” Tan said on the Q2 earnings call. “Our goal is to reduce inefficiencies and redundancies and increase accountability at every level of the company.”

The company also gave an update on its workforce, which has gone through several rounds of layoffs. Intel reduced its workforce by about 15% and plans to end the year with 75,000 employees, the company said. Intel was able to eliminate 50% of management layers through its recent layoffs, Tan said.

Intel announced in June in an internal memo that it was going to lay off 15% to 20% of workers in its Intel Foundry unit, which designs and manufactures chips for external clients. The company had 108,900 employees at the end of 2024, according to the company’s annual report filed with the Securities and Exchange Commission. That’s down from the 124,800 people it employed at the end of 2023.