The legend of 2nm technology is slowly fading! The new CEO emphasizes financial discipline, but the technological revival of Intel Corporation (INTC.US) appears to be a distant prospect.

Intel Corporation, the veteran chip giant in the United States, CEO Lip-Bu Tan vows to implement "new financial discipline" within the company. However, he failed to clearly articulate how the chip giant can become more competitive in the unprecedented AI boom and catch up with Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, the "king of chip fabrication" in the advanced chip manufacturing field. The market has not been able to glean from the new CEO's statements how Intel plans to regain dominance in the PC field and how to compete in the high-performance AI chip field dominated by NVIDIA Corporation. In April of this year, Intel Corporation's new CEO, Lip-Bu Tan, told investors in his first earnings call that turning around the struggling pioneer of x86 architecture chips will "take some time." However, just three months later, investors' patience seems to have worn thin. While Intel Corporation's stock price has risen by about 15% since Lip-Bu Tan took over as CEO in March, the recent weakness in the stock price, compared to its competitors, is evident. For example, NVIDIA Corporation's stock price surged nearly 50% during the same period, and AMD's stock price rose by 64%. The announcement of Lip-Bu Tan taking over as CEO from his predecessor Pat Gelsinger initially excited investors. However, as time passed, market sentiment gradually cooled. While Lip-Bu Tan has started to cut costs, he did not articulate Intel Corporation's plans regarding the 2nm advanced manufacturing process and the revenue and profit growth associated with the 18A and 14A technologies that Intel Corporation had previously focused heavily on. "18A," a category of chip manufacturing processes, refers to Intel Corporation's planned 1.8nm-level chips, as well as Intel Corporation's planned 3D chiplet advanced packaging technology roadmap. Intel Corporation's roadmap last year showed that it would be "ahead of the curve" in achieving the 18A process node compared to its competitors in the chip manufacturing field. However, under Lip-Bu Tan's leadership, the realization of the 18A and 14A processes seems to be increasingly distant. It is understood that Lip-Bu Tan stated during the earnings call that the company would cancel some large factory construction projects and take a more conservative approach to future spending. He also mentioned that the investments initiated by his predecessor were "overdone and unwise." Analysts speculate that these cut projects may be closely related to the plans for the 18A and 14A processes - Lip-Bu Tan hinted during the earnings call that capacity construction around 14A would only be planned when large orders are received from customers. Intel Corporation gave a revenue forecast for the third quarter that was higher than the general expectations on Wall Street, but the profit outlook was more pessimistic, with the profit margin expected to be lower than the Street's expectations. Since President Trump announced his global policy of equal tariffs, the market has been eagerly anticipating Intel Corporation benefiting from Trump's ambition to bring chip manufacturing back to the United States and the pressure of tariffs. NVIDIA Corporation, AMD, Apple Inc., Broadcom Inc., and other tech giants switching to Intel Corporation's 3nm, 2nm, 18A, and 14A process fabrication. However, up to 2025, Intel Corporation seems to have become a "helpless giant," as the two major narratives of Intel Corporation's growth that the market expected have not materialized. The reality of Intel Corporation is getting further and further away from these narratives, especially evident in the delay of Intel Corporation's 2nm and below processes. The market is beginning to speculate that the timeline for mass production of these processes is likely to be significantly delayed from the previously expected "ahead of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR" to "far behind Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR," or even facing an indefinite postponement by Lip-Bu Tan. Delay of 18A and 14A indefinitely? In Intel Corporation's second-quarter earnings report released on Thursday, Lip-Bu Tan stated that the company would cancel some large factory projects and take a more conservative approach to future spending. He called the massive investment in the 2nm and below cutting-edge processes initiated by his predecessor, Gelsinger, as "overdone and unwise." During a call with analysts, he said, "I don't buy into the overly optimistic view that if you build it, they will come." In the just-concluded second quarter, Intel Corporation's overall revenue reached $12.9 billion, roughly flat from the same period last year but above the Wall Street analysts' general expectation of $11.9 billion. The company reported a loss of 10 cents per share in Q2, while Wall Street had expected earnings of 1 cent per share. Intel Corporation's management provided a better-than-expected revenue forecast for the third quarter, but the profit outlook was more dim. The company said that the profit margin for this quarter would be lower than Wall Street's expectations, and perhaps it would only break even in the third quarter, while analysts had previously estimated earnings per share of 4-5 cents for the quarter. Lip-Bu Tan's remarks on profits and the 18A process have left investors feeling uneasy, as Intel Corporation's stock price fell about 5% in after-hours trading. Year-to-date, the stock had risen by 15%, which is comparable to most chip stocks' performance in 2025. However, Intel Corporation's long-time competitors NVIDIA Corporation and AMD had more outstanding stock performance. It seems that the main focus of this seasoned veteran in the chip industry at the helm of Intel Corporation is to reorganize the company's financial situation. This task includes laying off thousands of employees and significantly reducing capital expenditures, rather than the market's previous expectations of revitalizing Intel Corporation's fabrication map. The company announced on Thursday that the paused factory construction projects in Germany and Poland would no longer proceed, and the advanced process project in Ohio would also be significantly slowed down. Lip-Bu Tan also said during the earnings call that he would only promise to build manufacturing capacity around the upcoming 18A or 14A new manufacturing technology when customers place large orders, instead of the belief that "if you build it, they will come." Intel Corporation is expected to reduce spending on new factories and equipment this year and plans to further cut these budgets next year. Lip-Bu Tan, who became CEO in March, admitted that the company still needs to make efforts to make itself more competitive in its main markets - personal computers and server CPU processors. He is also formulating plans for Intel Corporation to enter the AI chip industry, which is currently dominated by NVIDIA Corporation. Intel Corporation stated that its overall revenue for the third quarter would range from $12.6 billion to $13.6 billion, with the average Wall Street analyst estimate at the low end of that range. The company has benefited from the recovery in the PC industry demand this year, partly due to manufacturers stockpiling inventory before the tariffs took effect, and the second logic is the resurgence of AI PC-driven demand. However, this Silicon Valley pioneer has been continuously losing market share to competitors in recent years and has failed to regain its dominance, leading to sluggish performance growth. In addition, the company has faced challenges in acquiring customers for its advanced fabrication business (manufacturing chips for external clients like NVIDIA Corporation and AMD). However, analysts are concerned that PC demand may slow down after a strong first half driven by tariffs. The company had previously warned during the last quarter's (Q2) earnings call that the threat of retaliatory tariffs in the U.S. and other countries might prompt PC buyers and manufacturers to rush to accumulate inventory before potential cost increases. The pace of massive layoffs continues Intel Corporation announced a layoff plan for the first time in the previous quarter's reporting period, aiming to reduce 15% of its workforce. Intel Corporation's CFO Dave Zinsner stated in an interview that the company also expects to further reduce personnel through natural attrition and division of business units. Intel Corporation cuts costs and impacts the workforce - the company's goal is to reduce the number of employees to 75,000 by the end of the year The chipmaker aims to reduce its workforce to 75,000 by the end of the year, a reduction of over 20% from the end of June. Intel Corporation's CFO Zinsner stated that demand in the last quarter exceeded expectations, as there was no significant economic slowdown or recession; however, the company realized that some of the demand might have been driven by consumers and businesses trying to avoid tariffs. "We had anticipated that tariffs might become headwinds in the second quarter and further disrupt the economy," he said. "But none of that happened." In the second quarter, Intel Corporation's Client Computing Group revenue reached about $7.9 billion, exceeding the Wall Street average forecast of $7.3 billion. Data center business revenue was about $3.9 billion, while the expected figure was $3.7 billion. The foundry business revenue was about $4.4 billion, in line with expectations. Intel Corporation had previously stated that it planned to reduce operating expenses to around $17 billion this year and further decrease to $16 billion in 2026. The company announced on Thursday that it would still achieve further staff reduction targets by 2025. When will the new technology come? Lip-Bu Tan's predecessor, CEO Gelsinger, had focused on expanding the global network of advanced process factories, which had been a key competitive advantage for Intel Corporation. He had developed a plan costing hundreds of billions of dollars to make its factories best in the industry again, forcing competitors to use Intel Corporation's 18A and 14A processes as the exclusive external manufacturing supplier. In a memo sent to employees on Thursday, Lip-Bu Tan stated, "We will take a radically different approach to building our foundry business. Over the past few years, the company has invested too much, too early, and the demand was not sufficient. In this process, our factory layout became unnecessarily dispersed and underutilized. We need to correct the direction." Currently, the largest users of its factories are Intel Corporation's internal design teams. Due to the 3nm advanced process technology lagging behind Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, some of Intel Corporation's best PC and server product combinations now contain core components manufactured by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, putting greater pressure on the company's profit margins. Intel Corporation's CFO stated that progress on a new production technology called 18A is proceeding well, and more competitive chips are expected to start off the assembly line from its factories later this year. The successor technology, 14A, will follow, which is more suitable for attracting external customers. Intel Corporation's adjusted gross margin - the percentage of sales revenue remaining after deducting production costs - was around 30% in the second quarter and is expected to rise to 36% in the current quarter. This level is close to half of Intel Corporation's chip dominance period in the PC and data center markets. For comparison, NVIDIA Corporation's gross margin exceeds 70%. The company's CFO Zinsner stated that the company is not yet ready to launch the next generation of AI-related chips. The chipmaker is focusing on developing products for areas in the market that have not been completely satisfied. Emarketer analyst Jacob Bourne stated in a report that ultimately, Intel Corporation needs to figure out how to benefit from the AI super wave. "A fundamental market fact will not disappear," he wrote. "The global demand for high-performance AI chips continues to surge, and Intel Corporation must find its foothold in this value chain."