Layoffs, buyouts expected as hits keep coming for beleaguered chip-maker.
Intel will lay off up to an additional 21,000 employees and scale back plans considerably as the semiconductor manufacturer posted a record fifth straight quarterly loss.
CEO Lip-Bu Tan announced the company layoffs and lowered revenue targets for 2025. Targets for operating costs in 2025 were lowered by $500 million, and $1 billion will be trimmed from the 2026 budget.
The company is headquartered in Santa Clara, Calif., but its Hillsboro campus employs about 22,000 employees, making it one of the state’s largest employers. In August Intel announced would eliminate 15% of its workforce and ended 2024 with around 109,000 employees. Bloomberg reported last week Tan now plans another round of cuts that will eliminate 20% of current employees.
Tan, a longtime Silicon Valley investor, was chosen last month by Intel’s board to help lead a turnaround. He said at the time Intel had strayed too far from customer needs and fell behind in innovation.
Intel has struggled to develop AI chips that compete with rival Nvidia and has also been slow to develop smaller and more effective chips for personal electronics. Analysts expect the market for consumer electronics to continue to decline as Trump’s tariffs take effect.
With offering specifics, Tan wrote layoffs would start this quarter and continue over the next few months. The layoffs are expected to be centered around buyouts and departmental reviews. Tan has said he’d like to eliminate layers of middle management. The company employs far more people than its semiconductor rivals and trails most in per-employee employee revenue, according to an analysis by the Wall Street Journal.
“There are many areas where we must improve,” Tan writes. “We need to confront our challenges head-on and take swift actions to get back on track. As I have said, this starts by revamping our culture. The feedback I have received from our customers and many of you has been consistent. We are seen as too slow, too complex, and too set in our ways — and we need to change.”
Intel’s stock dropped 7% the day following the announcement. In the past year, the company’s stock has declined by more than half.
The moves raise doubts about planned manufacturing plants in Europe and Ohio. Intel was a big winner in former President Joe Biden’s 2022 CHIPs and Science Act, receiving $7.86 billion in grants for research and new construction, though much of that will be awarded based on hitting construction milestones.
Tan’s predecessor, Pat Gelsinger, was pressured out by Intel’s board amid an ambitious plan to increase manufacturing capacity. One key initiative of Gelsingers was in contract chip-making for outside designers, an effort that has failed to land big-name customers. In light of economic realities, Intel has lowered its expected capital spending goal by $2 billion to $18 billion.
Though revenue was flat for the first quarter, Intel also posted a loss of $821 million, extending the streak of negative losses to five quarters.
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