Intel plans to cut over 20pc of workforce under new CEO Lip-Bu Tan

CALIFORNIA, UNITED STATES: Intel Corp is poised to announce plans this week to cut more than 20 percent of its staff, aiming to eliminate bureaucracy at the struggling chipmaker.

The move is part of a bid to streamline management and rebuild an engineering-driven culture. It would be the first major restructuring under new chief executive officer Lip-Bu Tan, who took the helm last month.

The cutbacks follow an effort last year to slash about 15,000 jobs – a round of layoffs announced in August. Intel had 108,900 employees at the end of 2024, down from 124,800 the previous year.

Tan is aiming to turn around the iconic chipmaker after years of Intel ceding ground to rivals. The Santa Clara, California-based company lost its technological edge and has struggled to catch up with Nvidia Corp. in artificial intelligence computing. That contributed to three straight years of sales declines and mounting red ink.

Tan, a veteran of Cadence Design Systems Inc., has vowed to spin off Intel assets that aren’t central to its mission and create more compelling products. Last week, the company agreed to sell a 51 percent stake in its programmable chips unit Altera to Silver Lake Management, a step toward that goal.

Intel needs to replace the engineering talent it has lost, improve its balance sheet and better attune manufacturing processes to the needs of potential customers, Than said last month at the Intel Vision conference.

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The company is schedules to report first-quarter results on Thursday, giving Tan an opportunity to lay out more of his strategy. Though the worst of Intel’s revenue declines are now behind it, analysts are not projecting a return to its previous sales level for years, if ever.

The 65-year old executive was hired after last year’s ouster of CEO Pat Gelsinger, who struggled to execute his own turnaround bid for Intel. He had embarked on a costly effort to expand the company’s factory network – and sought to turn Intel into a made-to-order chip manufacturer.

But Intel has now delayed much of its expansion effort, including plan for an Ohio factory that was once expected to become the world’s largest chip production hub. Intel also had been poised to be the biggest beneficiary of money from the 2022 Chips and Science Act, but that programme is now in flux under President Donald Trump.

A manufacturing partnership with Taiwan Semiconductor Manufacturing Co. – the source of investor speculation in recent months – also seems less likely to happen. TSMC CEO C. C. Wei said last week that the company would remain focused on its own business.

Along the way, Intel missed out on the most lucrative new field for the chip industry in decades. The company, which long dominated the market for personal computer and data center processors, was slow to respond to the shift to AI. That upheaval allowed Nvidia to grow from a niche payer into the world’s most valuable semiconductor company – with revenue that now eclipse Intel’s sales.

Gelsinger himself admitted that the company had lost its competitive spirit and expressed frustration with the speed at which it reacted to a changing market. He wasn’t given the time he’d said he would need to do something about that. Tan, in his first public appearance as CEO last month, said the turnaround would take time and wouldn’t be easy.

“It wont happen overnight,” he said. “But I know we can get there.”