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Intel will further shrink its workforce by 22% by the end of the year, as new CEO Lip Bu Tan drives a restructuring effort to regain market share and impose stricter financial discipline.
Since taking the role in March, Tan has pushed through job cuts, business divestments, and a reset of Intel’s manufacturing strategy. The company ended June with 96,400 employees and plans to reduce headcount to 75,000 by year-end through attrition and other means.
Middle management slashed in restructure
Intel's Chief Financial Officer David Zinsner said the workforce reduction included targeting excess layers of management. “We took out about 50% of the layers of the company,” he said, describing the approach as “surgical.”
Tan told 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.”
In a memo, Tan said the company is shifting from building factories ahead of demand to constructing only when customer need is confirmed. This shift includes slowing work at new sites in Ohio, halting factory plans in Poland and Germany, and consolidating chip packaging operations in Costa Rica with facilities in Vietnam and Malaysia.
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Manufacturing plans revised amid losses
Tan is also re-evaluating Intel’s chip manufacturing strategies. The firm’s quarterly filing state that without a significant external customer for the its 14A chip process, it may have to exit chip manufacturing altogether.
Tan said he will personally review and approve all major chip designs going forward. Speaking to analysts, he added: “I do not subscribe to the belief that if you build it, they will come.”
Intel forecast a third-quarter loss of 24 cents per share, steeper than the 18-cent loss Wall Street expected, according to LSEG. Revenue is expected to land between $12.6billion and $13.6billion. Second-quarter revenue came in at $12.9billion, topping analyst estimates of $11.92billion and ending a four-quarter streak of declines.
Job cuts contributed to $1.9billion in restructuring costs during the second quarter.
The sheer scale and speed of Intel’s workforce reduction will bring significant pressure to the HR team, which will be given a to-do list that includes offboarding processes, preserving morale among remaining staff, and reshaping the organizational structure to reflect Tan’s flatter management model. With nearly one in four roles being eliminated and layers of management being shelved in the process, continuation policy will be vital if Tan's reset is to prove effective.
