CIOTech Outlook Team | Friday, 25 July 2025, 05:53 IST
Intel, under CEO Lip-Bu Tan, is undergoing a major restructuring, aiming to become a leaner, cost-disciplined chipmaker. The company plans to reduce its workforce by 22 percent from 96,400 to 75,000 by year-end, primarily through attrition and by eliminating 50 percent of middle management layers. This follows a 15% headcount cut already completed, targeting a more streamlined operation.
Tan’s strategy, outlined in a memo to employees, emphasizes fiscal discipline, stating, “There are no more blank checks.” Investments must now align with customer demand and economic viability. Intel is scaling back its ambitious chip contracting business, which aimed to rival Taiwan’s TSMC but struggled to gain traction. Tan is reconsidering offering the 18A manufacturing process to external customers, focusing instead on using it for Intel’s own products to ensure returns.
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The company has also adjusted its manufacturing strategy, halting factory construction in Ohio, Poland, and Germany, and consolidating chip packaging in Vietnam and Malaysia, closing its Costa Rica facility. This shift moves away from building factories ahead of demand, a practice that contributed to Intel’s financial strain.
Intel is now cautiously advancing its next-generation 14A process, warning in a securities filing that failure to secure a major external customer could lead to exiting chip manufacturing entirely.
Intel’s challenges stem from years of management missteps, losing ground in the AI chip market dominated by Nvidia, and facing increased competition from AMD in PCs and servers. Despite Tan’s efforts, Intel’s shares dropped 4.5percent in extended trading after forecasting larger-than-expected third-quarter losses.
