According to IC Insights, demand for x86 PC processors fell 9% last year to 315 million units.
President Barack Obama described the fab, Fab 42, as "the most advanced, high-volume semiconductor manufacturing facility in the world.”
Intel had planned to spend $5 billion on the 14nm fab but, with capacity utilisation under 80%, has decided it would be better to upgrade existing fabs to 14nm than complete Fab 42.
Intel has been under pressure from financial analysts to rein in capex which was originally planned at $13 billion for 2014 but has now been trimmed to $11 billion.
The fab will remain closed for the foreseeable future and will not be used at the 14nm node.