Intel Stock Tumbles After CEO Says ‘No More Blank Checks’ for Chip Foundry

Intel’s CFO said lower tariffs helped boost the latest quarter’s results. (David Paul Morris/Bloomberg)

Intel stock was down sharply Friday after the chip maker reported better-than-expected revenue but failed to resolve doubts about its future in chip manufacturing.

“Over the past several years, the company invested too much, too soon—without adequate demand,” Intel CEO Lip-Bu Tan wrote in an internal memo published on the company’s website. “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.”

Intel shares initially rose almost 4% following the company’s earnings release Thursday evening, but they were down 9.8% in Friday morning trading.

Tan also outlined a number of changes to the company’s foundry business strategy. He said the company wouldn’t move forward with planned projects in Germany and Poland, adding Intel would also further slow down site construction in Ohio.

In a new securities filing, Intel said that if it is unable to secure a significant customer for the next-generation 14A manufacturing process “we may pause or discontinue our pursuit of Intel 14A and successor nodes and various of our manufacturing expansion projects.” The company also opened the possibility of using an external foundry if 14A doesn’t move forward.

Intel’s financial results beat expectations, though some Wall Street analysts pointed to a likely boost from customers buying hardware ahead of the potential imposition of tariffs.

For the June quarter, the company reported $12.9 billion of revenue, compared with analysts’ expectations for $11.97 billion. The company lost 10 cents per share in the quarter versus Wall Street’s consensus estimate for a 1 cent profit, according to FactSet. The earnings number may not be comparable as it included one-time costs and impairments.

Guidance was robust. Intel forecast revenue of $12.6 billion to $13.6 billion for the current quarter, versus the consensus call of $12.66 billion.

In a phone interview with Barron’s, Chief Financial Officer David Zinsner said the June-quarter results benefited from lower tariffs than feared and a better-than-expected economic environment. He nonetheless acknowledged that there is still uncertainty over tariffs that might come in the future. Zinsner also said he expects Intel’s capital expenditures to be down next year from the $18 billion gross capex level forecast for 2025.

“With the size and scale of Lip-Bu’s undertaking, we expect it will likely be at least several quarters, if not years, before investors can realistically expect to see material changes in Intel’s design or manufacturing competitiveness, its market share, its foundry business, or its broader financial picture,” wrote Benchmark Research analyst Cody Acree in a research note.

Acree kept a Hold rating on Intel stock with no price target.

The company also said it has completed a majority of the layoffs for the plan it announced last quarter. The head count reduction totals about 15% of the workforce. Intel expects to end the year at 75,000 employees through a combination of job cuts and attrition—down from 96,400 at the end of the second quarter.

Write to Tae Kim at tae.kim@barrons.com and Adam Clark at adam.clark@barrons.com