DMR News

Advancing Digital Conversations

Intel Shares Fall 8% as Foundry Business Cuts Projects Amid Customer Shortfall

ByDayne Lee

Jul 29, 2025

Intel Shares Fall 8% as Foundry Business Cuts Projects Amid Customer Shortfall

Intel’s stock fell more than 8% after the chipmaker announced plans to significantly reduce foundry costs, its latest effort to revive a struggling business segment.

Despite beating revenue expectations and issuing a strong sales forecast for the third quarter, concerns about Intel’s chip manufacturing future overshadowed the better-than-expected earnings report released Thursday evening. The company posted adjusted earnings of 10 cents per share, outperforming the average analyst estimate of 1 cent, according to LSEG.

CEO Signals Shift Toward Customer-Backed Manufacturing

Since his appointment in March, CEO Lip-Bu Tan has pushed for more discipline. In an employee memo, Tan explained that the upcoming 14A chip manufacturing process will proceed only with confirmed customer commitments — signaling an end to open-ended investments.

In a regulatory filing on Thursday, Intel warned it might “pause or discontinue” its foundry business if it cannot secure external customers for the next technology cycle.

“We have been unsuccessful to date in securing any significant external foundry customers for any of our nodes, and our prospects for securing a significant external foundry customer for Intel 14A are uncertain,” the filing stated.

Intel’s shares slid sharply on Friday, erasing most of its gains for the year. The stock is down roughly 60% in 2024 — the worst annual performance on record — reflecting the company’s challenges competing in the AI chip market dominated by Nvidia, as well as doubts about its foundry ambitions.

The company also announced cuts to chip plant projects in Germany and Poland, along with reduced production at its Ohio facility. Intel’s foundry business success depends heavily on winning a major external customer.

“Management wants external customer commitments to pursue the node, but in the meantime, this adds more uncertainty to product roadmaps and makes customer adoption more unlikely,” Barclays analysts wrote, maintaining a hold rating on the stock.

Tan acknowledged in his memo that his early months as CEO have been challenging. Intel is carrying out a workforce reduction plan expected to eliminate 15% of its staff, aiming to end the year with approximately 75,000 employees.

“Over the past several years, the company invested too much, too soon — without adequate demand,” Tan wrote. “In the process, our factory footprint became needlessly fragmented and underutilized.”

Financial Results Highlight Losses and Impairments

Intel’s net loss widened to $2.9 billion (67 cents per share) from $1.61 billion (38 cents per share) in the same quarter last year. The company recorded an $800 million impairment charge related to excess manufacturing tools without identified reuse.

JPMorgan Chase analysts called Intel’s foundry decision a “positive step,” though they remain concerned about ongoing market share losses.

Author’s Opinion

Intel’s decision to halt aggressive foundry expansion until securing customers is a much-needed dose of realism. Chasing sprawling ambitions without demand has drained resources and investor confidence. While painful, this focus on core strengths and disciplined investment offers Intel a better chance to stabilize and compete effectively in an increasingly fierce semiconductor landscape.


Featured image credit: Axel Bührmann via Flickr

For more stories like it, click the +Follow button at the top of this page to follow us.

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

Leave a Reply

Your email address will not be published. Required fields are marked *