Intel’s new CEO Lip-Bu Tan is cancelling chip factory construction around the world, terminating projects in Costa Rica, Germany and Poland.
That’s part of an aggressive restructuring at the troubled chipmaker where Tan said he is “instituting a policy where every major chip design needs to be personally reviewed and approved by me before tape-out…”
The semiconductor fab site in Germany was set to be a €40 billion investment, including €10 billion euros in subsidies from Berlin. Like Poland’s $4.6 billion plant, production was pencilled in to start in 2027.
Tan, who was appointed Intel CEO in March 2025, said bluntly on a Q2 call: “I do not subscribe to the belief that if you build it, they will come.”
“Under my leadership, we will build what customers need, when they need it and earn their trust through consistent execution… our factory footprint has become needlessly fragmented,” he told analysts.
“Going forward, we will grow our capacity based solely on the volume commitments and deploy CapEx in lockstep with the tangible milestones and not before… we will further slow the pace of construction in Ohio to ensure our spending is aligned with market demand,” he added July 24.
Global semiconductor sales hit $59.0 billion in May 2025, up 19.8% year-on-year, according to World Semiconductor Trade Statistics.
"Unwise and excessive"
But Tan said “the capacity investment we made over the last several years were well ahead of demand and were unwise and excessive…”
The troubled chip maker is now spinning off its Network and Edge Group (NEX) as a standalone business, Intel’s latest CEO said – adding that he hopes to make headway in building out an AI software strategy at the firm.
“We recognize the need to move up the abstraction stack into system and software. This is the area where Intel has traditionally been weak or entirely absent. But we intend to incubate and grow these important skill sets and capabilities under my leadership. This will take time, but it will be vital for Intel to stay relevant in the next wave of computing,” he said.
“We see the AI market continuing to evolve, and we are concentrating our efforts on areas we believe we can disrupt and differentiate like inference and agentic AI. We need to start by first understanding emerging and real AI workloads, then work backwards to design software, systems and silicon to enable best outcome for those particular workloads.”
Semiconductors are the US’s sixth largest export category, after refined oil, crude oil, natural gas, civilian aircraft, and automobiles.
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