Intel has pulled the plug on its planned chip fabs in Germany and Poland, ended its assembly and test operations in Costa Rica, and expects to cut its workforce by around one quarter by the end of the year, the company announced following the publication of its Q2 2025 earnings.

For the three-month period ending June 28, the company posted a net loss of $2.9 billion on $12.9bn in flat quarterly revenue.

Intel’s foundry business reported an operating loss of $3.17bn against revenue of $4.4bn, while its data center business reported $3.9bn in revenue, up four percent year-on-year.

Speaking on the earnings call after the results were published, Intel CEO Lip-Bu Tan said that with regards to the company’s 18A process technology, it was continuing to make “steady progress on our yield and performance targets,” adding that 18A is the foundation for “at least the next three generations of Intel client and server products,” and it was committed to scaling up the technology.

However, regarding Intel 14A, Tan said that given its increased costs, the company will only move forward with the technology if a “meaningful external customer to drive acceptable returns on our deployed capital” can be found.

“I do not subscribe to the belief that if you build it, they will come,” Tan further noted. “Under my leadership, we will build what customers need, when they need it, and earn their trust through consistent execution.”

He also said he was instituting a new policy that every major chip design would be “personally reviewed and approved” by him before tape out. “This discipline will improve our execution and reduce development costs.”

His comments echo those published by the company in a 10Q filing with the SEC, which read: “If we are unable to secure a significant external customer and meet important customer milestones for Intel 14A, we face the prospect that it will not be economical to develop and manufacture Intel 14A and successor leading-edge nodes on a go-forward basis.

"In such an event, we may pause or discontinue our pursuit of Intel 14A and successor nodes and various of our manufacturing expansion projects."

Separately on the call, Tan said he was “making progress on bringing in new leadership” for Intel’s data center business,” details of which would be announced next quarter. He added that Intel was still striving to become the “compute platform of choice,” and was also working towards delivering a full-stack AI solution, and would share more on that strategy “in the coming months.”

For the third quarter of 2025, Intel has forecast revenue of between $12.6bn and $13.6bn and has lowered its capex guidance from the start of the year by around $5bn, with the aim of reducing it even further in 2026.

European fabs canceled, assembly and testing consolidated, and more workforce cuts

On the earnings call, Tan said that going forward, Intel would deploy capex in “lockstep with tangible milestones, and not before,” and as a result, the decision had been made to cancel its planned fabs in Germany and Poland in addition to slowing construction at its Ohio site to “ensure our spending is aligned with market demand.”

Intel is also closing its assembly and testing facilities in Costa Rica and consolidating operations into its larger existing sites in Vietnam and Malaysia.

Providing an update on the layoffs that the company started to undertake last month, Tan said that by the end of 2025, Intel’s workforce will have reduced by approximately 15 percent to 75,000 “core employees,” down from around 110,000 at the end of 2024, of which 99,500 were designated “core employees.”

“These were hard but necessary decisions, and we reduced management layers by approximately 50 percent in the process,” Tan said, adding that Intel was also on track with the implementation of its return-to-office mandate starting September, a move which he said was necessary to help reduce the company’s operating expenses and make it “more agile, collaborative and vibrant to simplify our business and improve our product and process execution.“

In a publicly available memo to employees published after the results were announced and titled ‘Steps in the Right Direction,' Tan described Q2 as “the first step in the right direction,” saying the company’s operational results gave him “confidence” that Intel has “what it takes to win.”