Intel Q2 Loss $2.9B, Cancels Germany & Poland Factories

On July 24, Intel released its second-quarter financial results, revealing a mixed picture. The company reported $12.86 billion in revenue, slightly above analyst expectations, driven by stronger-than-expected sales of its data centers and AI businesses. However, profitability disappointed, and losses widened further.

To tighten spending and improve margins, Intel's CEO Pat Gelsinger announced several strategic moves: canceling previously paused factory plans in Germany and Poland, slowing down progress on the Ohio facility, and consolidating assembly and testing operations from Costa Rica into larger plants in Vietnam and Malaysia. Additionally, Intel plans a global workforce cut of 15%, aiming to reduce its core employee count to around 75,000 by the end of 2025.

As of December 2024, Intel had roughly 108,900 employees, so this cut would initially bring the number down to about 92,500. Which means further reductions up to nearly 20% may still be needed to reach the target headcount.

Gelsinger also emphasized continued investment in Intel's advanced 18A process node and confirmed the decision to redevelop the 14A node from the ground up as a foundry offering, with close collaboration underway with key external clients. Intel plans to revitalize its x86 ecosystem and sharpen its AI strategy moving forward.

Looking at the numbers, Intel's total revenue for Q2 grew marginally by 0.2% year-over-year. But the net loss widened to $2.92 billion, compared to a $1.61 billion loss last year. Adjusted earnings per share fell to a loss of 10 cents, far below expectations for a small profit. The adjusted gross margin slid to 29.7%, down from 38.7% a year ago and well below peak levels above 60%.

Breaking down the business units, product revenue was $11.8 billion, slightly down 1% year-over-year. The Client Computing Group saw revenue drop 3% to $7.9 billion, while the Data Center and AI Group grew 4% to $3.9 billion. The foundry business posted $4.4 billion in revenue, up 3%, but with a hefty operating loss of $3.17 billion. Other segments rose 20% to $1.1 billion.

Intel has launched three new Xeon® 6-series CPUs designed to boost GPU performance for demanding AI workloads. Among them, the Xeon® 6776P is already powering NVIDIA's latest AI accelerator system, the DGX B300. The first Panther Lake processor SKUs are still on track to ship later this year, with more expected in early 2026.

In manufacturing news, Intel began wafer production on its 18A process in Arizona, marking an important milestone. The company also appointed several key leaders in revenue and engineering roles to support its turnaround.

Financially, Intel raised around $922 million by selling 57.5 million shares of Mobileye, its autonomous driving unit, through a secondary offering in July 2025. Intel remains the majority shareholder and is confident in Mobileye's long-term growth.

For Q3, Intel expects revenue between $12.6 billion and $13.6 billion, slightly below the market consensus. GAAP gross margin is forecasted at 34.1%, with a GAAP loss of 25 cents per share. On a non-GAAP basis, the company predicts a 36% gross margin and breakeven EPS.

Intel keeps its full-year capital expenditure forecast steady at $8 to $11 billion. The CEO noted that most of the planned 15% workforce reduction has already been completed, aiming for a leaner, more agile organization. These cuts led to $1.9 billion in restructuring charges in Q2, excluded from non-GAAP results, impacting GAAP earnings by 45 cents per share.

To better align costs with demand, Intel is optimizing its manufacturing footprint—halting German and Polish projects, consolidating Costa Rica operations, and slowing Ohio construction. The company also recorded about $800 million in non-cash charges related to excess tools and one-time costs in Q2, which lowered margins and earnings further.

These restructuring and impairment costs are not factored into Intel's Q3 outlook.