Intel Corporation, once the unrivalled king of semiconductor innovation, is preparing for a massive workforce reduction in a bid to recover its lost technological edge and restore investor confidence. Over 20 percent of its global staff—nearly 22,000 employees—are expected to be impacted as the company undertakes its largest restructuring move in recent years.

The New Era Under Lip-Bu Tan Begins

This decisive move comes under the leadership of Lip-Bu Tan, who took over as Intel’s Chief Executive Officer last month. A respected name in the chip design ecosystem, Tan is best known for his tenure at Cadence Design Systems Inc., where he was instrumental in reviving the company’s core technical capabilities.

Tan’s vision for Intel is clear: return to engineering-first principles, shed non-core businesses, and reset Intel’s strategic direction to keep up in a rapidly evolving AI-driven semiconductor world.

20% Job Cut Aimed at De-layering Management

According to internal sources, the layoff plan is aimed at eliminating bureaucracy that has slowed Intel’s response to competitive threats, particularly in AI chip design and advanced manufacturing. The company is targeting middle management roles and functions seen as redundant or inefficient.

This follows a similar move in 2024, when Intel cut 15,000 jobs as part of an earlier restructuring plan. That brought its headcount down to 108,900 at the end of 2024 from 124,800 the previous year. With this latest announcement, Intel’s workforce could drop to below 90,000 — its lowest headcount in over a decade.

Turnaround Strategy: Focus on Core Engineering and AI Relevance

In his first public address at the Intel Vision conference, Tan underlined several key priorities:

• Rebuild lost engineering expertise

• Fix the balance sheet

• Improve manufacturing efficiency and customer alignment

• Shed non-essential assets

This includes the recent sale of a 51% stake in Intel’s Altera programmable chip business to Silver Lake Management. The move is aligned with Tan’s plan to streamline Intel's portfolio, keeping only units that align closely with its long-term mission.

Intel’s Competitive Gap in AI and Manufacturing

One of Intel’s biggest missteps has been its delayed response to the rise of AI. While rivals like Nvidia focused early on AI-focused GPUs and platforms, Intel remained entrenched in traditional computing chips. The result: Nvidia’s revenue now exceeds Intel’s, and it has grown into the world’s most valuable semiconductor firm.

Tan has acknowledged that Intel lost its competitive edge and failed to react swiftly to the changing dynamics in the chipmaking industry. He’s now tasked with rebuilding the company's technical prowess from the ground up.

Factory Delays and the Fading Foundry Dream

Under former CEO Pat Gelsinger, Intel launched an ambitious plan to become a made-to-order chip foundry, challenging TSMC and Samsung. But most of these efforts are now delayed or scaled back.

• The Ohio facility, once touted to be the largest chip factory globally, has seen prolonged delays.

• Intel’s partnership speculation with TSMC is losing ground, with TSMC CEO C. C. Wei recently saying the company will remain focused on its internal roadmap.

Tan now appears to be deprioritizing Intel’s foundry ambitions, especially as Chips and Science Act funding under President Trump faces increasing uncertainty.

Leadership Shift from Gelsinger to Tan

Lip-Bu Tan’s rise followed the removal of Pat Gelsinger in 2024, who failed to turn around Intel despite aggressive investments in infrastructure and production. Gelsinger’s strategy involved significant capital expenditure, but returns were slow, and Intel’s revenue saw three consecutive years of decline.

In contrast, Tan has promised fiscal prudence, targeted innovation, and a gradual rebuilding of confidence among stakeholders.

“It won’t happen overnight, but I know we can get there,” said Tan during his debut keynote.

Wall Street Perspective: Recovery Will Be Slow

While Wall Street analysts believe Intel’s worst revenue dip is behind it, they don’t expect a return to peak levels anytime soon. There’s consensus that Intel must redefine its place in the global chip ecosystem, especially in the AI and data center computing segments.

The market is eagerly awaiting Intel’s Q1 2025 earnings report, due this Thursday, where Tan is expected to provide more clarity on job cuts, asset sales, and product roadmap adjustments.

What This Means for Intel and the Industry

• For Intel employees, especially in managerial roles, job uncertainty looms as the company seeks to flatten its hierarchy and boost agility.

• For investors, Tan’s restructuring provides a glimmer of hope after years of stagnation and missteps.

• For competitors like Nvidia and AMD, Intel’s shift could either signal a new threat or underscore its struggle to remain relevant.

Conclusion

Intel’s decision to lay off more than 20% of its workforce is not just a cost-cutting move. It represents a broader, deeper strategic shift aimed at reviving a company that has long defined global computing. With a new CEO at the helm, Intel is finally acknowledging the need for speed, precision, and humility in the high-stakes race of AI and chipmaking.

Whether Intel can reclaim its former glory depends not just on cutbacks and restructuring, but on delivering innovation that matches the needs of a future increasingly shaped by artificial intelligence and custom silicon solutions.

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