Intel tumbled in late trading after chief executive officer (CEO) Lip-Bu Tan sparked concerns that he was more focused on cost cutting than restoring the chipmaker’s technological edge.

As part of Intel’s second-quarter report Thursday, Mr Tan said the company will cancel some factory projects and take a more conservative approach to future spending. Mr Tan called the investments begun under his predecessor, Pat Gelsinger, excessive and unwise.

“I do not subscribe to the belief that if you build it, they will come,” he said on a conference call with analysts.

The company is already laying off thousands of staff globally, with hundreds set to leave its Leixlip plant. Intel employs around 4,900 people in the State.

[ Intel to seek almost 200 mandatory redundancies at Leixlip plantOpens in new window ]

At the same time, Mr Tan struggled to give a clear picture of how he’ll make the company more competitive again. Mr Gelsinger had embarked on an ambitious plan to turn Intel into a chip foundry, a business that makes products for outside clients.

A key part of that was moving toward a more advanced production technique called 14A. But Mr Tan signalled on Thursday that Intel will only roll out that technology tentatively.

The company will add large-scale capacity for 14A when Mr Tan is convinced he has enough customers committed to using it, he said on the call. That didn’t sit well with investors, who sent the shares down about five per cent in late trading.

“The idea you might step away from 14A if you can’t get someone to invest in it is a problem,” said Wedbush analyst Matt Bryson.

In its report, Intel gave an upbeat third-quarter sales forecast while missing estimates for some profit measures. Margins will be tighter than Wall Street anticipated in the period, and Intel only expects a break-even quarter. Analysts had projected a four US cent gain on that basis.

In the second quarter, revenue amounted to $12.9 billion (€11 billion), little changed from a year earlier. Analysts had projected $11.9 billion. The company posted a loss of 10 cents a share, compared with an estimated profit of 1 cent.

Intel’s stock had been up 13 per cent this year through the close. Though that gain was in line with most chip stocks in 2025, rivals Nvidia and AMD have performed better – lifted by their artificial intelligence prospects.

Tan’s focus is getting Intel’s financial house in order, a task that has included thousands of lay-offs and the slashing of capital spending. The company said Thursday that already-paused factories in Germany and Poland won’t go ahead, and progress at another project in Ohio will be slowed.

Intel will reduce capital expenditures on new plants and equipment this year and plans to make further cuts to that budget next year. The company will spend about $18 billion this year and less in 2026, executives said.

Mr Tan, who took the CEO job in March, acknowledged that he still has work to do to make the company more competitive in its main markets: processors for personal computers and servers. He’s also still crafting Intel’s plan to crack the AI chip industry – an area where Nvidia dominates.

Third-quarter sales will be $12.6 billion to $13.6 billion, Intel said. Analysts on average had projected a number at the low end of that range.

The company has benefited from a resurgence in the PC industry, driven in part by manufacturers’ efforts to build up inventory before tariffs hit. But the Silicon Valley pioneer has lost market share to rivals and is struggling to attract foundry clients.

Intel’s lay-off plans – first announced during the previous quarterly report – will reduce staff by 15 per cent, Intel said. And the company expects further cuts through attrition and the splitting off of business units, chief financial officer Dave Zinsner said in an interview.

The chipmaker aims to end the year with 75,000 employees, down more than 20 per cent from the end of the June quarter. Bloomberg News reported in April that Intel was looking to cut its workforce by roughly that amount.

Analysts have expressed concern that PC demand will decelerate after a strong first half. The threat of tariffs imposed by the US – and other nations in retaliation – may have prompted PC makers to rush to stock up ahead of prospective cost spikes, the company warned last quarter.

Demand was better than expected last quarter because an economic slowdown didn’t materialise, Zinsner said. But the company is aware that some demand might have stemmed from consumers and businesses trying to avoid tariffs.

“We felt like tariffs might be a headwind in the second quarter and would further unsettle the economy,” he said. “None of that transpired.”

Intel’s client computing division had revenue of $7.9 billion last quarter, topping the average prediction of $7.3 billion. Data centre sales were $3.9 billion, compared with a $3.7 billion estimate. The foundry division generated revenue of $4.4 billion, in line with projections.

Intel had previously said it planned to cut operating expenses to about $17 billion this year and $16 billion in 2026. The Santa Clara, California-based company remains on track for the 2025 cuts, Intel said Thursday.

Tan’s predecessor, Mr Gelsinger, had concentrated on expanding Intel’s factory network, once its key competitive advantage. He laid out plans to spend tens of billions of dollars on making its plants the best in the industry again, a status that would force rivals to use it as an outsourced provider of manufacturing.

“We will take a fundamentally different approach to building our foundry business,” Tan said in a memo to staff Thursday. “Over the past several years, the company invested too much, too soon – without adequate demand. In the process, our factory footprint became needlessly fragmented and underutilised. We must correct our course.”

For now, the biggest user of its factories is Intel’s internal design teams. Some of Intel’s best offerings now contain components made by TSMC, adding more pressure to its margins.

Adjusted gross margin – the percentage of sales remaining after excluding the cost of production – was about 30 per cent in the second quarter and will be 36 per cent in the current period. That’s close to half of what it was when Intel’s chips dominated the data centre market. Nvidia has margins above 70 per cent.

Intel’s Zinsner said the company isn’t yet ready to unveil AI-related gear. The chipmaker is focusing on the development of products that will fit in unserved parts of the market.

Ultimately, Intel needs to figure out how it can benefit from artificial intelligence, Emarketer analyst Jacob Bourne said in a note.

“A fundamental market truth isn’t going away,” he said. “Global demand for AI chips continues to soar, and Intel must find its footing in that value chain.” – Bloomberg