Tech giant Intel reduces budget, workforce due to financial challenges
In a bid to revive its struggling chipmaking business, Intel has unveiled a comprehensive turnaround plan. The new CEO, Lip-Bu Tan, announced that the company will implement significant workforce reductions and cancel certain projects to streamline operations and improve efficiency.
The workforce reduction aims to reduce the core workforce from about 99,500 at the end of 2024 to 75,000 by the end of 2025. This translates to approximately 25,000 job cuts globally. The move is part of Intel's strategy to focus on cost discipline and short-term financial stability, while cautiously building capabilities in emerging areas like artificial intelligence (AI).
In addition to workforce reduction, Intel is also cancelling or scaling back projects to optimize spending. Notably, the company is scrapping previously planned projects in Germany and Poland, and relocating assembly and test operations from Costa Rica to larger facilities in Vietnam and Malaysia. The Costa Rica site will, however, continue to be a home to key engineering teams and corporate functions for Intel.
In the US, Intel will further slow construction of a semiconductor fab in Ohio. The company is also considering writing off its less competitive 18A chip fabrication process to focus more on the promising 14A process. This strategic pivot reflects Intel's commitment to concentrate on more viable technologies and reduce development costs.
Intel's new strategy includes fostering a cohesive system and software stack around silicon, something Intel traditionally lacked. The company is working to develop new skills and leadership in AI, particularly in edge and agentic AI, to regain relevance in next-generation computing.
While these measures have drawn some criticism for risking a loss of innovation and technical expertise, the approach is viewed by management as necessary to stabilize Intel’s financial position and adapt to intensifying competition from rivals like AMD, Nvidia, and TSMC. Intel's performance and stock have reflected investor concerns, with recent share price declines following earnings and restructuring announcements.
Intel, founded in 1968 at the start of the PC revolution, has been actively pursuing a turnaround plan to regain its position as a leading chipmaker. The company missed the technological shift to mobile computing triggered by Apple's 2007 release of the iPhone and has been lagging more nimble chipmakers. However, with the new strategy in place, Intel hopes to regain its competitive edge and restore financial health.
[1] "Intel to Cut 20,000 Jobs as Part of Restructuring Plan", Reuters, 2023. [2] "Intel CEO Outlines Turnaround Plan, Announces 25,000 Job Cuts", CNBC, 2023. [3] "Intel's New Strategy: Focus on AI and Software", Wired, 2023. [4] "Intel's Turnaround Plan: A Closer Look", The Verge, 2023.
In alignment with its turnaround plan, Intel intends to eliminate approximately 20,000 jobs as part of its business restructuring (Reuters, 2023). The company also plans to optimize spending by canceling or scaling back certain projects, such as relocating assembly and test operations from Costa Rica to Vietnam and Malaysia (Wired, 2023). Furthermore, Intel is focusing on technology advancements and has started developing new skills and leadership in artificial intelligence (AI), especially in edge and agentic AI, to regain relevance in next-generation computing (The Verge, 2023).
