Intel's revenue exceeded expectations, and it cut investment in wafer fabs. The CEO said "no more blank checks"

Intel's second quarter earnings report released on Thursday (July 24) showed that revenue exceeded Wall Street expectations. At the same time, the company's new CEO Lip-Bu Tan announced a significant reduction in chip factory construction investment. The stock rose slightly in after-hours trading.

Here is a comparison of the chipmaker's performance with the London Stock Exchange Group (LSEG) consensus expectations:

Earnings per share: adjusted loss per share of 10 cents. Revenue: $12.86 billion, expected to be $11.92 billion

Intel said it expects third-quarter revenue at the midpoint of $13.1 billion, higher than the average analyst expectation of $12.65 billion. The chipmaker said it expects third-quarter earnings per share to break even, while analysts had previously expected earnings per share of 4 cents.

Intel reported a net loss of $2.9 billion, or 67 cents per share, in the second quarter, compared with a net loss of $1.61 billion, or 38 cents per share, a year earlier. The company said earnings per share were not comparable to analyst expectations due to an $800 million impairment charge "related to excess tools for which no reuse path has been determined." This resulted in an adjustment of about 20 cents per share in earnings.

This is Intel's second earnings report since Lip-Bu Tan took over as CEO in March. He took office promising to make the chipmaker's products competitive again and reduce bureaucracy and layers of management, including cutting the number of employees in Oregon and California.

In a memo to employees released on Thursday, Lip-Bu Tan said his first few months in office "have not been easy." He said the company has "mostly" completed planned layoffs, which represent 15% of the total workforce, and plans to limit the total number of employees to 75,000 by the end of the year. Intel has previously said it is trying to cut operating expenses by $17 billion by 2025.

As of Thursday's close, Intel's stock price has risen about 13% this year, after plunging 60% in 2024, its worst annual performance on record.

In his memo, Lip-Bu Tan also announced several other spending cuts, especially in the company's costly foundry division, which makes chips for other companies and is still looking for big customers to support the business.

Intel said its foundry business had revenue of $4.4 billion and an operating loss of $3.17 billion.

Lip-Bu Tan said Intel has canceled planned fab projects in Germany and Poland and will consolidate test and assembly operations in Vietnam and Malaysia. He also said it would slow the construction of a cutting-edge chip factory in Ohio based on market demand and whether it can secure big customers for the plant.

"Over the past few years, the company invested too much, too early — without enough demand to justify it," Lip-Bu Tan wrote. "In the process, our factory footprint became unnecessarily fragmented and underutilized."

The company's upcoming chip manufacturing process, called 14A, will be produced based on confirmed customer orders, Lip-Bu Tan wrote.

"No more blank checks. Every investment must make economic sense," Lip-Bu Tan wrote.

The company's client computing unit, which mainly includes sales of central processing units for personal computers, had sales of $7.9 billion, down 3% from a year ago.

Revenue from the data center unit, which includes some artificial intelligence chips but is mostly central processing units for servers, rose 4% to $3.9 billion. Intel wants to regain market share in data center chips and is looking for a permanent head of the business, Lip-Bu Tan wrote in the memo. Longtime rival Advanced Micro Devices is gaining share of cloud customers' server business.

Lip-Bu Tan also added that all chip designs will be personally reviewed and approved by him before they complete the final design stage, the last step before going into production.