Intel Eyes Aggressive 2026 CapEx Cuts After 'Excessive' Spending: 'We Will Build What Customers Need, When They Need It,' Says CEO Lip-Bu Tan

Intel Corp. INTC is signaling a dramatic shift in its capital expenditure strategy, with plans for aggressive cuts in 2026, as CEO Lip-Bu Tan pledges to prioritize demand-driven investments over what he describes as “unwise and excessive” spending of the past.

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What Happened: “Unfortunately, the capacity investment we made over the last several years were well ahead of demand and were unwise and excessive,” stated Intel CEO, acknowledging past missteps.

This new, financially disciplined approach was a central theme during the company’s second quarter 2025 earnings call. CNBC’s Mad Money host, Jim Cramer, acknowledged this in an X post.

Lip-Bu Tan emphasized a new philosophy for Intel’s foundry business: “I do not subscribe to the belief that if you build it, they will come. Under my leadership, we will build what customers need, when they need it and earn their trust through consistent execution.”

Intel’s CFO, David Zinsner, confirmed the company’s commitment to reducing capital outlays. “We have already lowered our CapEx guidance from the beginning of the year by roughly $5 billion year-to-date,” Zinsner noted, adding that while further reductions in 2025 are challenging due to existing purchasing commitments, “we will continue to work to reduce capital spending in 2026.”

This strategic pivot includes halting manufacturing projects in Germany and Poland and consolidating assembly and test operations in Costa Rica. The pace of construction in Ohio will also be slowed, ensuring spending aligns with market demand.

Cramer’s in a following X post highlighted Intel’s new CEO’s focus on halting cash flow depletion, a stark contrast to the strategy under former CEO Pat Gelsinger.

This marks a significant move to improve Intel’s balance sheet, which has seen negative adjusted free cash flow since 2021, a situation Tan deemed “completely unacceptable.”

Why It Matters: Intel reported mixed second-quarter results; its revenue of $12.86 billion beat analyst estimates of $11.91 billion, whereas it posted an adjusted loss of 10 cents per share, missing analyst estimates for earnings of one cent per share.

It expects third-quarter revenue to be in the range of $12.6 billion to $13.6 billion, versus estimates of $12.63 billion. The chipmaker expects a third-quarter loss of 24 cents per share versus estimates for a loss of 18 cents per share.

Price Action: On Thursday, Intel shares fell 3.66% during the regular trading session and declined an additional 4.64% in after-hours trading. It was up 11.92% year-to-date and 27.23% lower over the past year.

Benzinga's Edge Stock Rankings indicate that INTC maintains solid momentum across short, medium, and long-term periods. However, while the stock scores well on value, its growth rating remains relatively weak. Additional performance details are available here.

The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, ended higher on Thursday. The SPY was up 0.033% at $634.42, while the QQQ advanced 0.21% to $565.01, according to Benzinga Pro data.

On Friday, the futures of the Dow Jones, S&P 500, and Nasdaq 100 indices were trading higher.

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