According to company officials, the layoffs will affect several hundred positions across various departments, including engineering, fabrication operations, support services, and some administrative units. While Intel has declined to disclose the exact number of employees impacted, internal sources suggest that the cuts could exceed 1,000 jobs globally, with a particular focus on underperforming units and overlapping functions.
“This is not a decision we take lightly,” an Intel spokesperson said in a prepared statement. “We are making strategic adjustments to our workforce to better align with the demands of our updated manufacturing roadmap and long term growth strategy. These steps are necessary to improve efficiency and reinforce our competitive position.”
Patrick Tan, who took over as CEO in late 2024 following the departure of Pat Gelsinger, has pledged to tackle the company’s most pressing challenges head on. Chief among those is Intel’s struggle to keep pace with rivals like Taiwan Semiconductor Manufacturing Company and Samsung Electronics, both of which have outperformed Intel in producing next generation chip technologies on schedule and at scale.
Under Tan’s leadership, Intel has doubled down on its Integrated Device Manufacturing 2.0 strategy, also known as IDM 2.0, which aims to modernize Intel’s chip production capabilities while simultaneously opening its factories to external customers through a newly expanded foundry business. However, analysts have noted that the plan’s success depends heavily on Intel’s ability to correct its recent missteps in process node development, particularly delays in transitioning to its 18A and 14A nodes, which are seen as critical to future product competitiveness.
“In recent years, Intel has suffered from execution issues that allowed competitors to leap ahead in performance and power efficiency,” said Stacy Rasgon, senior analyst at Bernstein Research. “Tan is under tremendous pressure to right the ship, and cutting costs is just one part of the equation. He also has to prove that Intel can deliver what it promises, on time.”
To that end, Tan has launched several internal reviews and reorganizations since assuming leadership. Sources say he has replaced senior managers at key fabrication sites, initiated third party audits of production timelines, and brought in consultants to help streamline logistics and supplier coordination. Insiders describe a new sense of urgency within the company, as teams race to deliver next generation chips to major customers, including data center operators and PC manufacturers.
Intel’s most recent earnings report, released earlier this month, painted a mixed picture of the company’s financial health. While revenue showed modest improvement year over year, gross margins remained under pressure due to elevated costs associated with manufacturing transitions and continued softness in the client computing group, Intel’s largest business segment. The company has also faced headwinds in its Mobileye and Altera subsidiaries, both of which are under review as potential spin offs or sale candidates.
In a recent internal memo to employees, Tan acknowledged the pain caused by the layoffs and restructuring, but stressed the importance of “building a leaner, more focused Intel capable of competing and winning in a new era of semiconductor innovation.” He also reaffirmed the company’s commitment to investing in advanced manufacturing facilities in Arizona, Ohio, and Europe, calling them essential to Intel’s future.
Wall Street reacted cautiously to the news, with Intel shares declining 1.4 percent in Thursday trading. Investors appear to be waiting for clearer signs that Tan’s turnaround strategy will yield results before fully backing the stock. Nevertheless, some analysts say the job cuts and strategic refocusing are necessary steps in what is likely to be a multi year recovery.
“The challenges Intel faces are real and complex,” said Dan Ives of Wedbush Securities. “But Tan is moving quickly, and the market is watching closely to see whether he can execute where past leadership stumbled.”
Further workforce changes and structural realignments are expected later this year, with company insiders warning that the current layoffs may not be the last. Intel has stated that it will offer severance packages, job placement assistance, and counseling services to all affected employees.
As the semiconductor landscape continues to evolve rapidly, Intel’s path forward will require not only cost discipline and operational excellence but also renewed innovation. For now, the company is betting that a smaller, more agile workforce under Tan’s leadership will help it reclaim its leadership position in the global chip market.
source: reuters.com