In a move to cut costs and refocus its manufacturing strategy, Intel said Thursday it will halt construction on major projects in Germany and Poland. The announcement came during the company’s Q2 earnings release, with CEO Lip-Bu Tan outlining a new, leaner approach to growth.

The company cited weaker-than-expected demand for its decision to scale back. Intel also plans to consolidate its testing operations in Costa Rica and shift work to sites in Vietnam and Malaysia.

Tan said previous investments created a bloated and inefficient factory network. “Going forward, we will grow capacity only with firm volume commitments,” he said. Capital spending will now be tied to real-world milestones.

Intel’s workforce has been heavily impacted by the changes. The company now expects to reduce headcount by 15%, shrinking from nearly 109,000 at the end of 2024 to 75,000 by year’s end. The Foundry division has been hit hardest.