Intel Corp. Chief Executive Officer Lip-Bu Tan vowed to impose “new financial discipline” at the chipmaker, but struggled to give a clear picture of how he’ll make the company more competitive again.

Intel shares dropped 4% in premarket.

As part of Intel’s second-quarter report Thursday, Tan said the company will cancel some factory projects and take a more conservative approach to future spending. Tan called the investments begun under his predecessor, Pat Gelsinger, excessive and unwise.

“I do not subscribe to the belief that if you build it, they will come,” he said on a conference call with analysts.

In its report, Intel gave a stronger third-quarter sales forecast than anticipated but a dimmer view of profits. Margins will be tighter than Wall Street estimated in the period, and Intel only expects a break-even quarter. Analysts had estimated a 4-cent gain on that basis.

Tan’s remarks left investors unsettled, with Intel shares falling about 4% in late trading. The stock had been up 13% this year through the close. Though that’s in line with most chip stocks in 2025, NVIDIA and rival Advanced Micro Devices have performed better.

The CEO’s focus is getting Intel’s financial house in order, a task that has included thousands of layoffs and the slashing of capital spending. The company said Thursday that already-paused factories in Germany and Poland won’t go ahead, and progress at another project in Ohio will be slowed.

Intel Corp. CEO Lip-Bu Tan News Conference

Tan said he would only commit to building capacity for a forthcoming new manufacturing technology — called 14A — when customers place orders in volume. Intel will reduce expenditures on new plants and equipment this year and plans to make further cuts to that budget next year.

Tan, who took the CEO job in March, acknowledged that he still has work to do to make the company more competitive in its main markets: processors for personal computers and servers. He’s also still crafting Intel’s plan to crack the AI chip industry — an area where Nvidia Corp. dominates.

Third-quarter sales will be $12.6 billion to $13.6 billion, Intel said. Analysts on average had projected a number at the low end of that range.

The company has benefited from a resurgence in the PC industry, driven in part by manufacturers’ efforts to build up inventory before tariffs hit. But the Silicon Valley pioneer has lost market share to rivals and is struggling to attract customers to its foundry business, which makes chips for outside clients.

Intel’s layoff plans — first announced during the previous quarterly report — will reduce staff by 15%, Intel said. And the company expects further cuts through attrition and the splitting off of business units, Chief Financial Officer Dave Zinsner said in an interview.

The chipmaker aims to end the year with 75,000 employees, down more than 20% from the end of the June quarter. Bloomberg News reported in April that Intel was looking to cut its workforce by roughly that amount.

In the second quarter, revenue amounted to $12.9 billion, little changed from a year earlier. Analysts had projected $11.9 billion. The company posted a loss of 10 cents a share, compared with an estimated profit of 1 cent.

Analysts have expressed concern that PC demand will decelerate after a strong first half. The threat of tariffs imposed by the US — and other nations in retaliation — may have prompted PC makers to rush to stock up ahead of prospective cost spikes, the company warned last quarter.

Economic Fears

Demand was better than expected last quarter because an economic slowdown didn’t materialize, Zinsner said. But the company is aware that some demand might have stemmed from consumers and businesses trying to avoid tariffs.

“We felt like tariffs might be a headwind in the second quarter and would further unsettle the economy,” he said. “None of that transpired.”

Intel’s client computing division had revenue of $7.9 billion last quarter, topping the average prediction of $7.3 billion. Data center sales were $3.9 billion, compared with a $3.7 billion estimate. The foundry division generated revenue of $4.4 billion, in line with projections.

Intel had previously said it planned to cut operating expenses to about $17 billion this year and $16 billion in 2026. The Santa Clara, California-based company remains on track for the 2025 cuts, Intel said Thursday.

Tan’s predecessor, Gelsinger, had concentrated on expanding Intel’s factory network, once its key competitive advantage. He laid out plans to spend tens of billions of dollars on making its plants the best in the industry again, a status that would force rivals to use it as an outsourced provider of manufacturing.

“We will take a fundamentally different approach to building our foundry business,” Tan said in a memo to staff Thursday. “Over the past several years, the company invested too much, too soon – without adequate demand. In the process, our factory footprint became needlessly fragmented and underutilized. We must correct our course.”

For now, the biggest user of its factories is Intel’s internal design teams. Some of Intel’s best offerings now contain components made by Taiwan Semiconductor Manufacturing, adding more pressure to its margins.

New Technology

Intel’s CFO said a new production technique called 18A is progressing well and that more competitive chips will start to come out of its factories toward the end of the year. The successor technology called 14A will follow and be better suited to trying to attract outside customers.

Adjusted gross margin — the percentage of sales remaining after excluding the cost of production — was about 30% in the second quarter and will be 36% in the current period. That’s close to half of what it was when Intel’s chips dominated the data center market. Nvidia has margins above 70%.

Intel’s Zinsner said the company isn’t yet ready to unveil AI-related gear. The chipmaker is focusing on the development of products that will fit in unserved parts of the market.

Ultimately, Intel needs to figure out how it can benefit from artificial intelligence, Emarketer analyst Jacob Bourne said in a note.

“A fundamental market truth isn’t going away,” he said. “Global demand for AI chips continues to soar, and Intel must find its footing in that value chain.”