Intel drops 9% as chipmaker’s foundry business axes projects, struggles to find customers

Intel’s stock dropped 9% after the chipmaker said it would slash foundry costs in its latest attempt to turnaround its struggling business.

📉 Why Intel Shares Dropped ~9%

1. Surprise Q2 2025 Loss

• Intel reported an adjusted loss of $0.10 per share, instead of the expected profit of $0.01—igniting a sharp market sell-off. Investors+15Investors+15The Motley Fool+15

• On a GAAP basis, the net loss widened to $0.67 per share, driven in part by restructuring charges. Investors

2. Troubled Forecast & Continued Restructuring

• The company guided to an even steeper loss in Q3 and reaffirmed plans to cut around 24,000 jobs globally and pause or cancel expansion projects in Germany, Poland, and Ohio. Wikipedia+4Reuters+4Barron’s+4

3. Foundry Business Under Fire

• CEO Lip‑Bu Tan explicitly warned that without a confirmed external customer, Intel may scale back or even exit its advanced chip foundry efforts—particularly the planned 14A node. Yahoo Finance+13Reuters+13Investors+13

• The company will focus primarily on its 18A process only for internal product use, reducing external client prospects. TechTarget+2Barron’s+2Investors+2

As a result, investors fear that Intel may effectively pivot toward a fabless model, relying on external foundries like TSMC for future enterprise needs. MarketWatch+3Business Insider+3Investors+3

📊 Financial Snapshot & Key Metrics

• Revenue for Q2 reached $12.9 billion, slightly above expectations (~$11.97B), showing modest year-over-year growth after four straight quarters of decline. Investors+1Barron’s+1

• Foundry sales rose ~3% to $4.4 billion, though this primarily stems from Intel producing chips for its own products rather than external clients. Investors+15Investors+15Tom’s Hardware+15

• Analysts now forecast the foundry business might not break even until 2027, contingent on securing meaningful outside customers. Yahoo Finance+8ctech+8Tom’s Hardware+8

🚧 Strategic Refocus & Business Implications

Workforce & Operational Cutbacks

• Workforce reduction of approximately 15–20%, aiming to shrink core headcount from ~99,500 to 75,000 by year‑end through layoffs and attrition. AP News

• Projects canceled or paused include fabrication plants in Europe (Germany, Poland) and slowing construction in Ohio. Assembly/test operations are being consolidated globally, with operations shifting from Costa Rica to Vietnam and Malaysia. Barron’s+2AP News+2Reuters+2

Foundry: Reassessed Strategy

• The 14A node development will proceed only if a major external client commits; otherwise, it may be shelved entirely, signaling an uncertain future for Intel’s role as a leading-edge foundry. Barron’s+3Reuters+3Barron’s+3

• CEO Tan emphasized scaling manufacturing spend based on actual customer demand, declaring “no more blank checks.” Investors+3Barron’s+3ctech+3

🔭 Outlook: What to Watch

• Customer commitments for 14A: Will any major external firms partner with Intel on the new chip node?

• Progress on 18A yields: Current internal defense contracts signal limited but concrete external work on 18A. NBC New York+12TechTarget+12Barron’s+12

• Potential spin-offs or business divestitures: Analysts expect separation of the foundry arm or increased outsourcing trends. MarketBeat+2Tom’s Hardware+2MarketWatch+2

• Timeline for turnaround: Analysts expect the transformation to take multiple quarters, possibly years, before financial stabilization. Barron’s

✅ Summary Table

Intel’s recent ~9% stock drop comes from a storm of negative signals: unexpected profits miss; deepening losses; failed foundry commitments; and a drastic shift in strategic direction. Investors are deeply hedging against Intel’s ability to reclaim leadership in manufacturing or regain external foundry clients.