Intel Corp. is preparing to make significant staff reductions this week, with over 21,000 employees set to lose their jobs, marking a drastic measure in the company’s ongoing restructuring efforts. This move represents more than 20% of Intel’s workforce and comes just months after a similar round of layoffs in which 15,000 employees were let go as part of a broader cost-cutting strategy.
According to a report by Bloomberg, citing an insider with knowledge of the matter, the latest layoffs are part of the company’s broader efforts to reorganize under its newly appointed CEO, Lip-Bu Tan. Tan, who took the helm of Intel last month, is tasked with leading the company through a critical transition as it aims to regain competitiveness, especially in the rapidly evolving AI chip sector.
At the end of 2024, Intel’s workforce had already shrunk to 108,900 employees, a notable decrease from the 124,800 employees it had at the same time the previous year. This ongoing reduction in headcount signals a shift towards a leaner and more focused business model as the company battles its way back from years of lagging behind competitors, most notably Nvidia, in the AI and semiconductor spaces.
This round of layoffs marks the first major restructuring under Tan’s leadership. Tan, previously the CEO of Cadence Design Systems, has made it clear that Intel is in dire need of a “fresh start.” After struggling to maintain its dominant position in the semiconductor industry, Intel is working to revamp its approach, focusing on rebuilding its engineering talent and restructuring its manufacturing processes. Tan has also been forthright about the need to stabilize the company’s finances and return Intel to a more sustainable trajectory.
Strategic Shifts and Recent Moves
Intel’s struggle to remain competitive has been marked by its inability to keep pace with the AI chip boom. In a significant move last week, the company sold a 51% stake in its programmable chip unit, Altera, to private equity firm Silver Lake, signaling a shift in focus as Intel adapts to changing market demands.
In his first official appearance as CEO, Tan outlined the challenges ahead, acknowledging that the road to recovery would be long and fraught with obstacles. He emphasized that the changes underway at Intel were just the beginning of a broader effort to regain market share and technological relevance.
In addition to staff cuts, the company is scheduled to report its first-quarter earnings later this week, where Tan is expected to outline more of his strategic vision for Intel’s future. Despite some analysts noting that the worst of Intel’s revenue decline may be behind it, the company’s path back to prominence is far from guaranteed. Wall Street remains cautious, with projections for a full recovery being uncertain and distant.
A Shift in Leadership and Future Prospects
Tan’s appointment comes on the heels of Intel’s former CEO, Pat Gelsinger, who struggled to meet the ambitious turnaround targets he set for the company. Gelsinger’s vision was to position Intel as a major contract chip manufacturer, akin to TSMC, but progress on this front has been slow. The company’s plans for a mega-facility in Ohio have been put on hold, and hopes for a deeper partnership with TSMC have dimmed.
In his first remarks as CEO, Tan emphasized that while the challenges ahead would be significant, he was committed to making bold moves to ensure Intel’s future success. The upcoming layoffs, combined with strategic shifts in focus and restructuring, signal that Tan is willing to make tough decisions to guide the company back into the competitive fold.
The task at hand is no small feat, but Intel’s leadership under Tan has begun to lay the groundwork for what is hoped to be a new era for the chipmaker. As the company navigates these turbulent times, all eyes will be on how Tan implements his vision and whether Intel can regain its place at the forefront of the semiconductor industry.
