Intel is moving to shed roughly a fifth of its workforce by the end of 2025, a drastic step revealing the chipmaker’s struggle to regain its place in the semiconductor industry.
The company confirmed plans to reduce headcount to 75,000, down from over 96,000, via attrition and targeted layoffs, many of which have already been executed.
This downsizing is just one piece of an overhaul led by newly appointed CEO Lip-Bu Tan, who stepped in earlier this year to confront years of strategic missteps and financial underperformance.
Despite a short-term bump in revenue, Intel expects to post a larger-than-anticipated third-quarter loss of 24 cents per share, well above the 18-cent loss forecast by Wall Street analysts. Shares tumbled nearly 6% in Frankfurt following the announcement.
Tan, who is pressing for a more cost-conscious and focused Intel, made his intentions clear in a memo to employees: “There are no more blank checks. Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution.”
That message is a big difference from the company’s previous approach under former CEO Pat Gelsinger, who championed aggressive expansion plans and heavy investment in next-generation manufacturing processes like 18A and the upcoming 14A node.
Tan, however, appears sceptical of that strategy’s commercial viability, particularly when it comes to selling these technologies to external customers. Reuters recently reported that Intel may abandon plans to offer 18A tech to outside firms altogether.
In what he describes as a “disciplined approach,” Tan is halting construction of new chip plants in Poland and Germany, slowing down development in Ohio, and consolidating packaging operations from Costa Rica to more established hubs in Vietnam and Malaysia.
“I do not subscribe to the belief that if you build it, they will come,” he said in a call with analysts, adding that he will personally approve all major chip designs going forward.
Chief Financial Officer David Zinsner told Reuters the company has taken a “surgical” approach to job cuts, removing about half of Intel’s management layers in the process. The aggressive cost-cutting contributed to restructuring expenses of $1.9 billion in the second quarter alone.
Despite the grim forward-looking forecast, there were signs of short-term improvement. Intel’s second-quarter revenue held flat at $12.9 billion, breaking a year-long streak of declining sales and surpassing analysts’ expectations of $11.92 billion.
Still, adjusted earnings showed a loss of 10 cents per share, in stark contrast to estimates of a 1 cent gain. The unadjusted figure was worse: a 67-cent-per-share loss.
Intel’s competitiveness has eroded significantly over the past decade. While Nvidia has surged to the top in the high-growth AI chip segment, and AMD continues to nibble away at its market share in both consumer and server chips, Intel has struggled to deliver products on time and budget.
Its push into the chip foundry business—intended to rival industry leader TSMC—has largely faltered.
“They may have overspent on 18A … but I think this is the painted picture of a new fiscally disciplined base that they’re going to go from here. I think that’s the right approach,” said Ben Bajarin, CEO of Creative Strategies.
The global economic backdrop hasn’t helped. Although semiconductors have been spared from sweeping tariffs, customers remain cautious due to macroeconomic challenges, usually pulling forward orders or delaying long-term commitments.
