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Intel is preparing for a wave of job cuts that will reduce up to 20% of its factory workforce in July, signaling a major shake-up at the heart of its chip production operations.
It is the latest in a series of swathing job cuts across the tech sector, which has been 'right-sizing' following rapid recruitment during the pandemic. Now, however, firms find themselves struggling to meet the twin challenge of developing and adapting artificial intelligence, while also utilising it to assist with or replace various roles, particularly at the entry level.
“These are difficult actions but essential to meet our affordability challenges and current financial position of the company. It drives pain to every individual,” wrote Intel manufacturing Vice President Naga Chandrasekaran in a memo to employees.
While Intel declined to comment on the memo directly, it stated it will “treat people with care and respect as we complete this important work.”
The firm said: “Removing organizational complexity and empowering our engineers will enable us to better serve the needs of our customers and strengthen our execution. We are making these decisions based on careful consideration of what’s needed to position our business for the future.”
July cuts follow prior 15,000 layoffs in 2024
The chipmaker first announced job cuts in April but only recently revealed their scale. The factory unit, Intel Foundry, includes a range of roles from technicians to advanced researchers. The company had 109,000 employees at the end of 2024 but did not disclose how many work in Foundry.
While Intel broader job reductions are planned, it has so far not broken down the numbers by business unit.
“These reductions will be based on a combination of portfolio changes, level and position elimination, skill assessment for remaining positions, and some hard decisions around our project investments,” Chandrasekaran said. “We are also taking into consideration factory operations impact.”
Intel’s Oregon operations, which employ 20,000 people, are expected to feel the brunt of the layoffs. The company already eliminated 15,000 jobs in 2024, including 3,000 in Oregon. This year’s cuts are unlikely to include buyouts, early retirements, or attrition.
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Ohio opening postponed amid AI chip struggles
The company is grappling with reduced demand and fierce competition in PCs and data centers, as well as its failure to produce advanced chips for the AI market.
It received $7.9billion in federal subsidies last year for new or expanded factories in Oregon, Arizona, New Mexico, and Ohio. Just $1billion of that has been delivered so far, with the remainder under review by the Trump administration.
Plans to open a $10billion factory in Ohio have been pushed back to 2030, while the timeline for a planned expansion at Intel’s D1X research factory in Hillsboro, Oregon remains uncertain. The $115million in state funds for that site could be clawed back if hiring and revenue targets are missed.
New CEO Lip-Bu Tan has emphasized the need to streamline the organization, reduce management layers, and recruit top engineering talent. Balancing such large-scale layoffs with talent retention will be a major test of that strategy.
