Intel Lays Off More Staff as CEO Tan Rolls Out Radical Reforms to Correct Manufacturing Blunders
Intel, the former crown jewel of the U.S. chip industry, is experiencing one of the largest overhauls in its history. Under the new stewardship of CEO Lip Bu Tan, Intel is dramatically shrinking, planning to trim its staff by 22% by 2025—an enormous number for a company that listed 96,400 employees in June.
This deep cut is only the latest move in Tan's effort to remake Intel as a leaner, lower-cost chipmaker after years of strategic miscues. "There are no more blank checks," Tan wrote to employees in a memo, marking a turnaround to a rigorous investment strategy aimed at clear economic payback.
Strategic Shifts: From Ambition to Accountability
Tan, who became chief in March, is committed to turning back the fortunes of the last leadership's risky but flawed gambles. Intel lost its lead in the AI chip race to Nvidia and AMD, and its attempts to establish a competitive chip foundry business to challenge Taiwan's TSMC have mostly failed.
One of the main issues has been Intel's 18A manufacturing process, a cutting-edge chip technology that saw huge investment under previous CEO Pat Gelsinger. Tan now feels that 18A ought to be used mainly by Intel for its own chips, raising doubts over previous proposals to offer the tech to outside customers. Analysts have surmised that the company could ultimately exit the chip manufacturing business if it fails to land a big outside customer for its next 14A process.
Factory Plans Reduced
Intel is slowing down new factory construction in Ohio and shelving previously planned projects in Poland and Germany. Tan is also centralising chip packaging operations, shifting efforts from Costa Rica to existing sites in Vietnam and Malaysia.
I don't believe in the theory that if you build it, they will come," Tan said on a conference call with analysts, making it clear that Intel will only build new factories when there is evident customer demand.
Financial Picture: Revenue Stabilizes, But Losses Grow
In spite of better-than-anticipated Q2 revenue of $12.9 billion, Intel recorded a large unadjusted loss of 67 cents per share, significantly below Wall Street estimates. It also predicts a Q3 loss of 24 cents per share, versus forecasts of 18 cents.
Intel's restructuring efforts led to $1.9 billion in Q2 restructuring expenses. Nevertheless, CFO David Zinsner emphasised the layoffs were "surgical," eliminating about half the layers of the company's management to drive out bureaucracy and increase efficiency.
FAQs About Intel's Current Restructuring
Why is Intel laying off so many employees?
Intel is downsizing by over 21,000 employees to correct strategic errors, reduce operational costs, and streamline the company under new CEO Lip Bu Tan. The move is aimed at restoring profitability and competitiveness in a rapidly evolving chip industry.
What is the 18A manufacturing process, and why is it controversial?
The 18A process is Intel's cutting-edge chip fabrication technology. Although it was greatly invested in by the former CEO, Tan thinks that unless applied to Intel's own chips alone, it might not provide enough returns.
Is Intel getting out of the chip fabrication business?
Not yet, but it's possible. Intel cautioned that if it doesn't find a significant outside customer for its new 14A chip technology, it might reconsider continuing in the manufacturing business at all.
What is changing in Intel's factory plans?
Intel is slowing down factory building in Ohio and shelving planned facilities in Germany and Poland. It is also consolidating packaging operations for cost savings and greater efficiency.
How is Intel's financial performance?
Although Q2 revenue was flat at $12.9 billion, Intel posted greater-than-expected losses. Its Q3 projection indicates ongoing losses, although revenue expectations are modestly enhanced, which suggests a slow and agonising turnaround might be under way.
As Intel weathers a choppy environment of AI innovation, international trade transitions, and competitive intensity, CEO Lip Bu Tan's turnaround plan heralds an organisation no longer ready to bet the farm—but one now committed to restoring trust, efficiency, and long-term relevance.
