TLDR
- Intel beat Q2 revenue expectations with $12.8 billion but missed earnings per share due to impairment charges
- The company is cutting 15% of its workforce, reducing headcount to approximately 75,000 employees by year-end
- Intel canceled factory projects in Germany and Poland while slowing construction in Ohio due to overinvestment
- Stock dropped 8.5% in premarket trading despite initially rising after earnings release
- Q3 revenue guidance of $12.6-$13.6 billion matched Wall Street expectations
Intel delivered mixed second-quarter results that initially lifted shares before sending them tumbling in premarket trading. The chipmaker beat revenue expectations but missed on earnings while announcing major workforce reductions.
The company reported Q2 revenue of $12.8 billion, beating Wall Street’s $11.8 billion estimate. However, Intel posted an adjusted loss of $0.10 per share compared to analysts’ expectations for a $0.01 profit.
Intel’s stock initially jumped 3.9% after the earnings release but quickly reversed course. Shares fell 8.5% to $20.71 in premarket trading Friday morning.
The earnings miss stemmed from $800 million in non-cash impairment and accelerated depreciation charges. These related to excess manufacturing tools with no identified reuse potential.
Intel also recorded roughly $200 million in one-time period costs during the quarter. These charges weighed heavily on the bottom line despite strong revenue performance.
Workforce Reductions and Factory Cancellations
CEO Lip-Bu Tan announced Intel would cut its workforce by 15%. The company expects to end the year with approximately 75,000 employees, down from 96,400 at the end of Q2.
Intel has already completed the majority of these layoffs. The reductions combine job cuts with natural attrition to reach the target headcount.
The company also canceled planned factory projects in Germany and Poland. Construction of Intel’s Ohio facility will proceed at a slower pace.
“Over the past several years, the company invested too much, too soon—without adequate demand,” Tan wrote in an internal memo. “Going forward, our investment in Intel 14A will be based on confirmed customer commitments.”
Intel’s CFO David Zinsner expects capital expenditures to decline next year from the $18 billion gross capex forecast for 2025. The company is taking a more cautious approach to manufacturing investments.
Product Performance and Market Position
Intel’s Products business generated $11.8 billion in revenue, beating expectations of $10.9 billion. This division includes laptop and desktop CPUs plus data center and AI chips.
The Foundry business brought in $4.4 billion versus expectations of $4.3 billion, representing 2% growth. This manufacturing division serves third-party customers but continues struggling for market share.
Intel faces growing competition from AMD and Qualcomm in the PC chip market. Qualcomm’s Snapdragon X Plus and X Elite processors are pushing deeper into Intel’s traditional territory.
The company’s 18A manufacturing technology remains central to its foundry strategy. Intel has secured agreements with Microsoft and Amazon to produce chips using this process.
However, a recent 10Q filing revealed Intel may pause or discontinue 14A development without customer commitments. The company even opened the possibility of using external foundries if internal manufacturing doesn’t progress.
Benchmark Research analyst Cody Acree maintained his Hold rating with no price target. He expects material changes to Intel’s competitiveness will take several quarters or years to materialize.
Intel provided Q3 revenue guidance of $12.6 billion to $13.6 billion, matching Wall Street’s $12.6 billion consensus estimate. CFO Zinsner noted the quarter benefited from lower tariffs and a better economic environment than expected.
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