Intel Announces 15% Workforce Cut and Abandons Factory Plans in AI-Driven Restructuring

Intel CEO Lip-Bu Tan announced in a company-wide memo that the chipmaker plans to cut its global workforce by about 15%, or more than 25,000 employees, in an effort to restructure and compete in the fast-growing AI market. The move comes as Intel continues to struggle, with the company reporting its sixth consecutive quarterly loss and facing increasing pressure from rivals in the semiconductor industry. Tan emphasized that the layoffs are part of a broader strategy to streamline operations, improve efficiency, and boost accountability across the organization. In addition to the job cuts, Intel is canceling plans for new factories in Germany and Poland and slowing construction of a major chip plant in Ohio. Originally slated for completion by the end of 2024, the Ohio facility is now expected to be finished after 2030, as the company adjusts its spending to match market demand. This trend of workforce reductions is not unique to Intel. Other Silicon Valley tech giants, including Meta and Google, have also been cutting staff as they shift focus toward AI. Microsoft recently laid off 9,000 workers despite record profits, highlighting the challenges of adapting to the evolving tech landscape. However, Intel’s situation is more precarious, as it has lagged behind in key areas like the smartphone and AI markets. The company is now doubling down on its latest chipmaking technology, Intel 18A, which is set to power its next-generation microprocessor, Panther Lake, expected to launch later this year. Looking ahead, Intel plans to develop its next major process node, Intel 14A, in close collaboration with external customers, focusing only on projects with clear demand. Tan stressed that the company will no longer make investments without a clear economic rationale, aiming to build what customers need, when they need it, and earn their trust through reliable execution. In terms of AI, Intel is shifting toward a more integrated approach, developing a cohesive stack strategy that includes not just hardware but also software and systems. The company is targeting areas where it believes it can differentiate itself, such as AI inference—where models make real-time decisions—and agentic AI, which involves systems that operate autonomously and take actions on their own. Tan outlined the company’s strategy in the memo, stating that Intel will start with emerging AI workloads and then design software, systems, and silicon to support them. While the steps taken by Intel signal a renewed focus on efficiency and customer-driven innovation, the question remains whether the company can successfully reverse its decline or if it has fallen too far behind in the race to lead the next wave of AI advancements.