Intel postpones $28B chip factories, completion now expected by 2030
What's the story
Intel has announced a major delay in the completion of its $28 billion chip fabrication plants in Ohio, US.
The first factory, situated in New Albany, is now expected to be operational only by 2030. This new timeline pushes the original schedule by at least five years.
Once construction is completed, the factory is expected to start operations between 2030 and 2031.
Strategy change
Strategic shift and financial adjustments
The delay in factory construction is also a part of Intel's larger strategy to become a contract chip manufacturer for other companies.
The move is intended to bring the company back to its former glory but has been putting a lot of pressure on its finances.
To combat that, Intel has been cutting capital expenses and adopting cost-saving measures, including a 15% workforce reduction last year.
Financial management
Approach to managing capital and market demand
Naga Chandrasekaran, General Manager of Intel Foundry Manufacturing, said the changes were made to align factory operations with market demand and manage capital responsibly.
"We are taking a prudent approach to ensure we complete the project in a financially responsible manner," he said in a message to employees.
The company's second Ohio factory is slated for completion in 2031 and is expected to start operations in 2032.
Market reaction
Intel's financial goals and market response
Despite the delays, Intel's shares soared over 5% before closing about 1% higher.
The company's financial chief David Zinsner told Reuters last month that their target was to keep operating expenses at around $17.5 billion for 2025.
The announcement comes as Intel continues to manage its finances as it transitions into contract chip manufacturing.