Ailing chip giant Intel is ditching its manufacturing sites in Germany and Poland and signaling further job cuts ahead as its new leader tries to stem the losses and turn the Silicon Valley pioneer’s fortunes around.
In a memo to all employees, chief executive Lip-Bu Tan said he was choosing a different approach to building up the firm’s foundry business that would be “aligned with the needs of customers” as well as judicious and disciplined.
“With that in mind, we have decided not to move forward with previously planned projects in Germany and Poland,” he said.
This means that the much-vaunted megafab near Magdeburg in eastern Germany, first announced in 2022, will not be built. Intel was planning to invest more than €30 billion (about $35 billion) in the chip factory, but it ran into delays and former chief Pat Gelsinger put it on hold last year.
Its cancellation means that Intel stands to lose out on the €10 billion ($11.7 billion) in subsidies it was set to receive from the German government as EU Chips Act funding for the site.
Similarly, it will no longer receive the $1.9 billion approved by the European Commission as a state aid package towards the $4.6 billion it previously planned to spend on building an assembly and testing facility outside Wroclaw, Poland.
Tan said that Intel remains “deeply committed” to investing in the US, but will also be further slowing construction of its fabrication plant in Ohio to “ensure our spending is aligned with demand.” Completion of the site has been pushed back several times already, the last being earlier this year when the chipmaker said it would not now happen before 2030.
The bad news keeps coming for Intel staff, as Tan confirmed plans to lay off approximately 15 percent of the workforce, but said Chipzookie still aims to end the year with a global headcount of about 75,000. If that comes to pass, it will mean that the company will have shed about a quarter of its workers within a year.
“We are making hard but necessary decisions to streamline the organization, drive greater efficiency and increase accountability at every level of the company. These actions are critical to strengthening our competitive position going forward,” he said, while adding that “it means we are saying goodbye to valued colleagues.”
Intel’s chief also hinted at a new AI strategy, saying the chipmaker had previously approached AI with a traditional, silicon and training-centric mindset, and that this needed to change.
“We will focus our AI efforts on developing a cohesive silicon, system and software stack strategy,” he stated, claiming Intel has already started “incubating new capabilities” and attracting new talent.
Tan’s memo coincided with the release of Intel’s Q2 2025 financial results for the three months ended June 28, which showed revenue was essentially flat compared with a year ago, at $12.9 billion. Net losses widened to $2.9 billion from $1.6 billion for the same period of 2024.
The revenue figure was higher than analysts expected, according to Marketwatch, which said that the company’s stock slid by 4.6 percent in extended trading as investors are concerned over growing restructuring charges that are hitting profits.
Intel’s Data Center and AI (DCAI) business unit saw its revenue rise by 4 percent to $3.9 billion, while the Client Computing Group (CCG) was down by 3 percent to $7.9 billion.
The troublesome Foundry division actually saw its revenue rise by 3 percent compared with a year ago to $4.4 billion, according to Intel.
Intel’s guidance for the third quarter of 2025 is for revenue of between $12.6 and 13.6 billion.
In a glimmer of good news for the chipmaker, a federal judge this week granted Intel a motion to dismiss a lawsuit against the company by investors who had alleged it misrepresented the performance of its Foundry business.
The judge ruled that the plaintiffs in the twice-amended complaint had failed to demonstrate any of Intel’s statements were misleading. ®