Intel delivered better-than-expected revenue for its second quarter and issued a fairly positive outlook for its third quarter, but other moves were in the spotlight as the company reported second quarter earnings this week.
Among those moves, the company appears to be committed to its 18A process, but will cut back on its plans to build new manufacturing sites in Europe and slow a major project in the US. Intel also confirmed plans to cut about 15% of its workforce.
These decisions were revealed in a public memo published along with the company’s earnings report. In the memo, which covered topics ranging from foundry plans to AI strategy, Intel CEO Lip-Bu Tan expressed a commitment to the company’s 18A process strategy that might come as a surprise, given recent speculation that Tan could shift the company’s focus away from 18A in favor of its next-generation 14A process technology.
“Job number one is ramping Intel 18A at scale,” Tan stated. “Intel 18A and Intel 18A-P are critical nodes for Intel Products and will drive meaningful wafer volumes well into the next decade – starting with Panther Lake later this year. As we ramp our own products in high volume and deliver for important Intel 18A customers like the U.S. government, we will be in a better position to attract external customers to this technology.”
Regarding 14A, Tan added, “Looking further ahead, we’re developing Intel14A as a foundry node from the ground up in close partnership with large external customers. This is essential to designing a process that meets specific customer requirements and enables us to address a broader segment of the market. Going forward, our investment in Intel 14A will be based on confirmed customer commitments. There are no more blank checks. Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution.”
However, regarding the company’s foundry build-up, Tan said Intel is slowing its construction of a planned factory in Ohio, while also abandoning projects in Germany and Poland, and moving manufacturing and testing operations in Costa Rica to our larger sites in Vietnam and Malaysia.
“Going forward, we will follow a systematic approach to growing our factory footprint that’s fully aligned with the needs of our customers. We will be judicious and disciplined as we allocate capital – because that’s what great foundries do.”
Of the job cuts, Tan said eliminating about 15% of the workforce will lead to Intel ending this year with a global workforce of about 75,000 employees. “We completed a significant amount of our workforce reductions in Q2, streamlining the number of management layers by about 50% in the process,” he wrote, in reference to his previously-stated ambition to reorganize Intel to achieve a flatter management structure.
Tan’s statements overshadowed Intel’s earnings numbers for the quarter. The company reported $12.9 billion in revenue for the period, essentially flat when compared to the second quarter a year ago, but at the high end of Intel’s previous guidance and ahead of analyst estimates. Intel also forecasted revenue for the third quarter of between $12.6 billion and $13.6 billion, an outlook that was greeted positively by investors that had been expect something less.
Second quarter evenue in the company’s Data Center and AI unit was up about 4% year over year to $3.9 billion, while its Client Computing Group revenue slipped about 3% to $7.9 billion. Intel Foundry managed revenue growth of 3% year over year to $4 billion.