Intel cancels German fab, looks to sell off Edge chip business
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Intel is cancelling its leading edge fab in Madgeburg, Germany, as well as a chiplet packaging plant in Poland as part of its restructuring.
The company is also looking to sell off its networking and edge chip business and build a vertical stack for AI inference and agents.
The company said back in September last year that the Madgeburg fab was on ‘pause’, despite €6.8bn of incentives from the European Commission and German governments to provide leading edge chip making capability in Europe. However CEO Lip-Bu Tan says Intel will now link building chip capacity to customers, says meaning the project is dead.
“We will take a fundamentally different approach to building our foundry business,” said Tan. “Over the past several years, the company invested too much, too soon – without adequate demand. In the process, our factory footprint became needlessly fragmented and underutilized. We must correct our course.”
“With in mind, we have decided not to move forward with previously planned projects in Germany and Poland. We also plan to consolidate our assembly and test operations in Costa Rica to our larger sites in Vietnam and Malaysia. Costa Rica remains a large and important Intel site that’s home to key engineering teams and corporate functions.
This leaves Fab34 in Leixlip, Ireland, with 3nm technology as the leading edge production in the region.
Intel Ohio fabs
The same cost pressures that hit Madgeburg have also hit the building of two fabs in Ohio in the US is also slowing. The build had already been delayed until 2030 and are aimed at 18A process technology, which by then will be mature.
“We remain deeply committed to investing in the US, where we will apply the same level of financial discipline. To that end, we are further slowing construction in Ohio to ensure our spending is aligned with demand,” said Tan.
The same requirement for customers before investing in capacity is putting the following process node, 14A, at risk.
“Looking further ahead, we’re developing Intel14A as a foundry node from the ground up in close partnership with large external customers. This is essential to designing a process that meets specific customer requirements and enables us to address a broader segment of the market,” he said.
“Going forward, our investment in Intel 14A will be based on confirmed customer commitments. There are no more blank checks. Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution.”
At the same time it has confirmed it is looking for a buyer for the networking and edge business.
“We plan to establish key elements of our Networking and Communications business as a stand-alone company and we have begun the process of identifying strategic investors,” said the company in a statement. “Like Altera, we will remain an anchor investor enabling us to benefit from future upside as we position the business for future growth.”
FPGA-designer Altera was spun out earlier this year, following the IPO of its automotive chip division Mobileye in 2022.
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Despite significant layoff of 15%, Tan is looking to build a full stack offering of chips, firmware and software for AI inference and agentic AI, working with startups. This may also include acquisitions.
“We will focus our AI efforts on developing a cohesive silicon, system and software stack strategy. In the past, we have approached AI with a traditional, silicon- and training-centric mindset. This needs to change – and we have already started incubating new capabilities while attracting new talent,” he said.
“As we make this shift, we will concentrate our efforts on areas we can disrupt and differentiate, like inference and agentic AI. Our starting point will be emerging AI workloads – then we will work backward to design software, systems and silicon that enable the best customer outcomes. We have a lot of work underway, and will be sharing more about our plans in the coming months.”
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