Intel may be forced to leave the chip manufacturing business if it can’t find a major external partner for its 14A process.
Intel might be forced to pull the plug on its next-generation 14A. If this happens, the company expects “significant material impairments” related to its roughly $100 billion in chipmaking equipment.
Intel’s chipmaking future is in doubt
Intel has warned that it may be forced to exit the advanced chip manufacturing business if it cannot secure a major external customer for its next-generation 14A process.
The announcement was made during its second-quarter earnings release on Thursday, and follows a turbulent year for the company so far marked by mounting losses, strategic reversals, and a leadership overhaul.
Lip-Bu Tan, who took over as CEO in March after the ousting of Pat Gelsinger, confirmed that the company would only move forward with the costly 14A manufacturing line if external commitments materialize.
“We will build what our customers need, when they need it, and earn their trust through consistent execution,” Tan said in a memo accompanying the results. Without those commitments, Intel may cancel or pause development of 14A and subsequent technologies entirely.
Intel’s quarterly filing described the success of 14A as essential to the company’s ambition to be a competitive foundry player.
If abandoned, Intel would rely increasingly on Taiwan’s TSMC, the world’s largest contract chipmaker, for its future manufacturing needs. Such dependency would mark a historic retreat for a company that once led the semiconductor industry and prided itself on controlling every part of the chip production process.
Intel’s shift away from in-house advanced manufacturing threatens to weaken the U.S.’ ambitions to regain technological leadership in semiconductors. As the only American firm currently capable of fabricating advanced chips, Intel has long been a key beneficiary of U.S. government incentives under the former President Biden administration’s CHIPS Act, aimed at reducing reliance on Asia-based manufacturers.
Intel has retreated from European expansion
Alongside its 14A warning, Intel disclosed a $2.9B net loss for Q2 2025 due to the restructuring costs and layoffs tied to Tan’s turnaround plan. The company’s revenue remained flat year-over-year at $12.9B, but still exceeded analyst expectations of $11.9B. The company issued a relatively strong third-quarter revenue forecast of $12.6B to $13.6B.
Nevertheless, the results have prompted Intel to abandon its previously announced manufacturing projects in Germany and Poland. These initiatives had already been paused in September but are now officially scrapped.
Tan’s strategy includes concentrating resources on U.S. operations, including slowing construction in Ohio while refocusing capital expenditure domestically.
“The past few months have not been easy,” Tan told employees in a company-wide memo, referencing the 15% workforce reduction currently underway.
CFO David Zinsner noted that some of the Q2 revenue gain may be attributable to customers pulling forward orders in anticipation of possible U.S. tariff changes, though he admitted it was difficult to quantify the exact impact.
Intel’s shares fell sharply in response to the earnings announcement, dropping 4.6% in after-hours trading after a 3.7% decline during Thursday’s session.
Despite the losses, Tan emphasized that the company is making deliberate, if painful, decisions to correct course. He said Intel’s foundry business had been “needlessly fragmented and underutilized” and that he would now take a “fundamentally different approach.”
Under Gelsinger, the company poured billions into its foundry ambitions to compete with TSMC but struggled with delays and execution failures, particularly around the 18A process.
Tan, seeking to avoid those mistakes, has insisted that the 14A effort will be built “from the ground up in close partnership” with prospective customers.
His approach appears to be paying early dividends.
“That gave me a lot more confidence that this time, we have customers that are engaging early enough,” Tan said during the earnings call.
KEY Difference Wire: the secret tool crypto projects use to get guaranteed media coverage
Source: https://www.cryptopolitan.com/intel-could-leave-chip-manufacturing/