Intel’s manufacturing dream hits reality check with global factory delays
Postponed chip plants in the U.S. and Israel signal deeper financial and strategic concerns for the company.
Intel’s latest announcement of significant delays to its $28 billion chip manufacturing project in Ohio marks another major setback for the struggling semiconductor giant. The company now expects its first factory in New Albany to be operational only by 2030 or 2031—half a decade later than initially planned. This follows its decision last June to freeze a $25 billion expansion of its Kiryat Gat facility in Israel. Together, these developments underscore the mounting financial and strategic difficulties Intel faces as it attempts to reposition itself in the semiconductor industry.
Intel’s decision to postpone the Ohio project further reflects the harsh realities of its aggressive push into contract chip manufacturing, an effort aimed at competing with dominant foundries like Taiwan's TSMC and South Korea’s Samsung. This transition, intended to restore Intel’s competitive edge, has strained the company’s balance sheet and forced it to scale back capital-intensive investments.
A global pattern of delays
The slowdown in Ohio is not an isolated event but part of a broader retrenchment. The pause in Kiryat Gat, which Intel initially downplayed as a routine scheduling adjustment, signaled that the company was grappling with deeper financial constraints and strategic uncertainty. While some of the Israeli factory’s operations continue, Intel has yet to decide on the specific technology and customer base for its second production line there—reflecting a cautious approach to capital deployment.
The situation in Ohio follows a similar trajectory. Intel originally presented the project as a flagship investment in America’s semiconductor renaissance, bolstered by $8.5 billion in direct financing and $25 billion in tax incentives under the CHIPS Act. However, as with Kiryat Gat, Intel is now tempering expectations, opting for a phased construction process rather than the ambitious timeline it initially laid out.
Mounting financial pressures
Intel’s financial health has deteriorated significantly over the past two years. The company’s revenue has been declining amid fierce competition from Nvidia and AMD, particularly in the AI-driven semiconductor market. In response, Intel has taken aggressive cost-cutting measures, including layoffs affecting 15% of its workforce, a suspended dividend, and a reduction in capital expenditures.
David Zinsner, Intel’s chief financial officer, has made clear that the company is prioritizing financial discipline, with a goal of capping operating expenses at $17.5 billion for 2025. This explains Intel’s caution in rolling out new factories—each representing a multibillion-dollar investment that requires strong customer demand to justify. Unlike its competitors, which enjoy steady orders from key partners, Intel is still struggling to secure long-term commitments for its contract chip manufacturing division.
The foundry gamble and its challenges
Intel’s pivot toward contract manufacturing—its so-called "foundry" model—was meant to position the company as a serious alternative to TSMC and Samsung. However, the transition has proven difficult, particularly as global semiconductor supply chains remain in flux. While Intel has received government support in both the U.S. and Israel, these incentives have not been enough to offset its internal struggles.
With the Kiryat Gat expansion in limbo and the Ohio project now pushed into the next decade, Intel faces an increasingly difficult road ahead. Former CEO Pat Gelsinger’s vision of transforming the company into a dominant force in contract chip manufacturing is still far from being realized. The delays highlight not just financial caution but also strategic uncertainty—Intel cannot afford to miscalculate, yet its hesitancy risks leaving it further behind in an industry defined by rapid technological advancement.
For now, Intel’s focus remains on stabilizing its core business while trying to execute its foundry ambitions. Whether it can successfully navigate these challenges—or if it will be forced to further scale back its manufacturing aspirations—will determine its place in the semiconductor industry’s future.
First published: 21:47, 01.03.25
