Key Takeaways

• Workforce Cuts: Intel (INTC) is laying off 22,000 employees (over 20% of its workforce) as part of a restructuring effort under new CEO Lip-Bu Tan.
• AI Strategy Shift: Tan is focusing on reshaping Intel’s AI strategy, including internal testing of its Falcon Shores chips and development of the 18A chip-manufacturing process.
• Financial Outlook: Intel is expected to report a $987 million net loss for Q1 2025, despite projections for an adjusted $9 million profit.

Intel’s Major Workforce Reduction Under New CEO

Intel is preparing to announce sweeping layoffs this week, marking one of the first major moves by new CEO Lip-Bu Tan, who assumed leadership just last month. On Tuesday, reports emerged that the company will reduce its global workforce by more than 20%, amounting to approximately 22,000 jobs. This decision is part of Tan’s broader initiative to streamline operations, eliminate bureaucratic inefficiencies, and shift Intel’s focus back to its engineering roots. The chipmaker, which had 108,900 employees at the end of 2024, has faced prolonged challenges, including leadership missteps and a loss of competitive edge to Taiwan’s TSMC.

These layoffs follow a previous workforce reduction of 15,000 employees last year. Despite the looming cuts, Intel’s stock rose 7.0% in midmorning trading to $20.87, though it has dropped 43% over the past 12 months. The market response reflects cautious optimism about Tan’s bold restructuring efforts aimed at reviving the once-dominant semiconductor giant.

Refocusing on AI and Innovation

The workforce reduction is a critical piece of Tan’s strategy to reposition Intel in an increasingly competitive semiconductor landscape, particularly in the booming field of artificial intelligence. Intel missed key opportunities in the AI chip market, allowing rivals like Nvidia (NVDA) to take the lead. The company had pinned its AI hopes on the Falcon Shores chips, but those have now been relegated to internal testing, leaving Intel without a competitive flagship offering in this high-growth area.

To reverse course, Tan has begun flattening the company’s leadership structure and recently appointed a new AI chief to spearhead its artificial intelligence initiatives. At the center of Intel’s innovation push is the 18A chip-manufacturing process, which the company hopes will restore its technological edge. Early tests have begun, and major clients like Nvidia and Broadcom are reportedly evaluating the new process—an encouraging sign as Intel looks to attract external business to validate its manufacturing ambitions.

Financial Outlook and Challenges Ahead

Intel’s first-quarter earnings, offered the first glimpse into how Tan’s turnaround plan is taking shape. The company beat analyst expectations on both EPS and revenue. The results will be closely watched by investors weighing Intel’s long-term prospects against a backdrop of rising geopolitical tensions, particularly the ongoing U.S.-China trade war, which could further complicate its global operations.

Market analysts remain cautious. Wedbush has maintained a neutral rating on Intel’s stock and recently revised its price target down to $19, from a previous $20. While some speculate on a potential split between Intel’s chip design and manufacturing units, the focus for now is squarely on the success of the 18A process and whether it can anchor Intel’s return to prominence in a fiercely competitive industry.