Intel is pausing construction of the Magdeburg chip plant and a packaging facility in Poland for about two years. The move follows widespread speculation about the firm’s future after a series of downbeat earnings while investing heavily in a technological comeback and manufacturing capacity expansions. CEO Pat Gelsinger says it’s time to rethink “our capital efficiency.” He’s slowing down “to a more normalized cadence of node development and a more flexible and efficient capital plan.” The company is still moving forward with fab projects in the US.
Following a dramatic Q2 earnings report in August, Intel already announced a 10-billion-dollar cost savings operation, including a workforce reduction of 15 percent, a 20 percent capex reduction and a downsizing of R&D activities. FPGA unit Altera will be spun back out. Per Monday’s announcement, the company’s manufacturing arm, Intel Foundry, will become a full subsidiary.
Gelsinger also had some good news to report: Intel has signed “a multi-year, multi-billion-dollar” deal with Amazon Web Services to manufacture AI and X86 data center chips. This is the type of high-profile customer that the CEO needs to convince critics that his company has a future as a foundry. A recent report that test runs failed to convince Broadcom didn’t help his cause.
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