Intel cuts more jobs to save $1.5bn
Intel is cutting $1.5bn over the next 18 months that would see substantial job cuts and a $2bn reduction in capital spending that will hit equipment suppliers.
The move by new CEO Lip-Bu Tan will see a cut of $500m in 2025 and $1bn in 2026 to $16bn. The revenue for the first quarter of 2025 was $11bn, flat on the same quarter last year, with the prospect for Q2 similarly flat.
Part of this is to slimline teams, says Tan. Last year the company announced 15% cuts, with 15,000 job losses, and the additional $1.5bn brings that up to 20% of the 108,000 staff. This has led to reports of 20,000 job cuts. There are 4,900 staff at Intel’s leading edge 3nm fab in Ireland, as well as 4,000 in seven centres in Israel, where plans to expand Fab 38 to 2nm have been suspended.
“I’ve been surprised to learn that, in recent years, the most important KPI for many managers at Intel has been the size of their teams. Going forward, this will not be the case,” Tan told staff in a company-wide email. “I’m a big believer in the philosophy that the best leaders get the most done with the fewest people. We will embrace this mindset across the company, which will include empowering our top talent to make decisions and take greater ownership of key priorities.”
“Many teams are eight or more layers deep, which creates unnecessary bureaucracy that slows us down,” he said. “All critical product, manufacturing, and G&A functions, which were spread over two to three layers are now directly reporting to me. This will allow me to get closer to our product and engineering groups and work directly with them to close the gaps with competition more quickly,” he also told analysts.
“There is no way around the fact that these critical changes will reduce the size of our workforce. As I said when I joined, we need to make some very hard decisions to put our company on a solid footing for the future. This will begin in Q2 and we will move as quickly as possible over the next several months.”
The forecast for Q2 is uncertain and the company expects a slow down in the PC market
“The very fluid trade policies in the US and beyond, as well as regulatory risks, have increased the chance of an economic slowdown with the probability of a recession growing. This makes it more difficult to forecast how we will perform for the quarter and for the year,” said David Zinsner, chief financial officer and former co-CEO before Tan.
“While we have offsets, including a global, highly diversified manufacturing footprint to help mitigate tariffs, we will certainly see costs increase, and we feel it prudent to anticipate a TAM (total available market) contraction. The biggest risk we see is the impact of a potential pullback in investment and spending as businesses and consumers react to higher costs and the uncertain economic backdrop.”
The number of people this will hit is still up in the air but proportionately this would be around 2700. “We are still in the process of working through the details of how we land to that number. We have not yet identified what that means from a headcount perspective,” said Zinsner.
Intel is also reducing its capital expenditure spend by around $2bn, mainly by pushing out equipment purchases which will hit equipment makers in Europe.
“We have $50 billion or so of assets under construction that are — a lot of which are is equipment that’s still in bubble wrap. So we’re, in some ways, taking more aggressive approach to driving better return on what we’ve spent already. And that’s allowing us to spend less in capital,” said Zinsner.
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