Key Points
- Intel’s stock dropped 8% after the new CEO warned the company might stop manufacturing its chips.
- The company will only proceed with its next-generation “14A” manufacturing if it secures a major customer.
- CEO Lip-Bu Tan is reversing the previous strategy by halting work on new plants and cutting costs.
- The move comes as Intel reported another quarterly loss and continues to lose market share to Nvidia and AMD.
Intel’s stock sank 8% on Friday after its new CEO, Lip-Bu Tan, delivered a stunning warning: the company could exit the chip manufacturing business if it fails to land a major customer for its next-generation technology. The announcement came as the company reported another quarterly loss and forecasted more financial trouble.
The drastic plan represents a complete reversal of his predecessor’s strategy. Tan said he would shrink Intel’s workforce further and halt work on two plants in Europe while slowing another in Ohio. He is ditching the expensive plan to build massive new facilities to restore Intel’s manufacturing edge, declaring in a memo to employees, “There are no more blank checks.”
The move highlights the deep trouble at the American tech icon, which has lost significant market share to rivals. Nvidia dominates the booming AI chip market, while AMD has been stealing Intel’s core business in PCs and data centers.
Under the new strategy, Intel’s future in manufacturing now hinges on its advanced “14A” chipmaking process. Tan stated that Intel will only proceed with 14A if a major external customer commits to using it. If not, the company could be forced to abandon its foundry business, putting $100 billion in assets at risk and making it more dependent on its rival, TSMC.
