Intel plans to announce plans this week to cut more than 20% of its employees to eliminate bureaucracy among struggling chip makers, people familiar with the matter said.
According to the person, the move is part of a simplified management and reconstruction engineering-driven culture, as the plan is private and he requests not to be identified. This will be the first major restructuring under new CEO Lip-Bu Tan last month.
Cutting measures cut about 15,000 jobs last year, a round of layoffs announced in August. Intel had 108,900 employees at the end of 2024, down from 124,800 employees the previous year.
Intel representatives declined to comment.
Intel shares rose 3.5% before the New York Stock Exchange opened on Wednesday. The stock has fallen about 43% over the past 12 months and closed at $19.51 on Tuesday.
After years of Intel ceding the ground, Tan’s goal is to reverse the iconic chip maker. The Santa Clara, California-based company has lost its technological advantage and has been struggling to catch up with Nvidia Corp. in AI computing. This led to a three-year decline in sales and continued red ink.
Cadence Design Systems veteran Tan vowed to tear down Intel assets that weren’t the core of its mission and create more compelling products. Last week, the company agreed to sell a 51% stake in its programmable chip unit Altera to Silver Lake Management, a step towards that goal.
Tan said at an Intel Vision meeting last month that Intel needs to replace its lost engineering talent, improve its balance sheet and improve a better Attune manufacturing process to meet the needs of potential customers.
The company plans to report first-quarter results on Thursday, giving Tan an opportunity to develop more strategies. According to Wall Street estimates, while Intel’s worst revenue decline is now behind, analysts have not predicted a return to its previous sales levels over the years, if any.
The 65-year-old executive was hired after ousting CEO Pat Gelsinger last year, who struggled to execute his turnaround bid. He worked hard to expand the company’s factory network and tried to turn Intel into a chipmaker to order.
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But Intel has now delayed most of its expansion efforts, including plans for the Ohio facility, which once expected to be the world’s largest chip production center. Intel is also preparing to be the biggest monetary beneficiary in the 2022 CHIPS and Science Act, but the program is now in constant change under President Donald Trump.
Manufacturing partnerships with Taiwanese semiconductor manufacturing companies, the source of investor speculation in recent months, also seem unlikely to happen. TSMC CEO CC WEI said last week that the company will continue to focus on its business.
In the process, Intel has missed the most profitable new areas of the chip industry for decades. The company has long dominated the market for personal computers and data center processors and has been slow to respond to the shift toward AI. This turmoil has led NVIDIA from a niche player to the most valuable semiconductor company in the world – revenue has now made Intel’s sales disappear.
Gelsinger himself admitted that the company lost its competitive spirit and expressed frustration at the speed of its response to the ever-changing market. He didn’t give him time to say he needed to do something. Tan, who was CEO for the first time last month, said the turnaround will take time and it is not easy.
“It won’t happen overnight,” he said. “But I know we can get there.”
