Struggling chipmaker Intel reduces budget, workforce in an effort to regain market footing
In an effort to create a faster-moving, flatter, and more agile organization, Intel Corporation has announced a series of changes aimed at improving efficiency, sharpening its core market focus, and strengthening its position in Artificial Intelligence (AI) and other priority technology areas.
The changes, which include a planned 15% reduction in headcount, management layer cuts by about 50%, and efforts to streamline operations, are part of a broader restructuring effort at the company. This restructuring is a response to financial and competitive challenges, as well as the need to adapt to the evolving semiconductor landscape.
Financial pressure and restructuring are key drivers behind these changes. Intel's previous workforce reductions in 2024 were a reaction to worsening financial conditions. The current cuts, under the leadership of CEO Lip-Bu Tan, who took over in March 2025, aim to continue this cost discipline while refocusing efforts on more profitable and strategically important areas.
Strategic shifts are also a significant part of these changes. Intel is exiting less profitable or non-core businesses such as its automotive chipmaking division and spinning off units like RealSense computer vision. This enables the company to concentrate resources on its core semiconductor technologies and rapidly growing fields, especially AI, which represents a significant growth opportunity for Intel.
Organizational agility is another key aspect of these changes. By cutting management layers almost in half and enforcing new workplace policies (including return-to-office mandates), Intel aims to reduce bureaucracy and improve decision-making speeds to better compete in the fast-evolving tech environment.
The pivot toward AI offerings is part of Intel’s emphasis on innovation and market leadership in next-generation computing technologies. This reflects broader industry trends where AI plays a central role in driving future growth.
In addition to these changes, Intel will move assembly and test operations in Costa Rica to larger sites in Vietnam and Malaysia. The company will also scrap previously planned projects in Germany and Poland, and further slow construction of a semiconductor plant in Ohio.
Despite these efforts, Intel did not meet the analysts' expectations for the second quarter, posting a loss of $2.9 billion and a loss per share of 67 cents, compared to 38 cents a year earlier. Excluding one-time items, the company posted a loss of 10 cents a share.
As of the market close on Thursday, Intel's market cap was $98.71 billion, compared to Nvidia's $4.24 trillion. Intel's chips have been overshadowed by those made by once-smaller rival Nvidia in the booming field of artificial intelligence.
Intel Corp. plans to end the year with 75,000 "core" workers, a decrease from 99,500 core employees at the end of last year. The company has also stated that there are no more "blank checks" at Intel, with CEO Tan emphasizing that every investment must make economic sense.
[1] Intel Corporation (2025). Intel Announces Broad Restructuring Plan to Accelerate Transformation and Drive Long-Term Growth [Press Release]. Retrieved from https://www.intel.com/content/www/us/en/newsroom/press-kits/2025/intel-announces-broad-restructuring-plan-to-accelerate-transformation-and-drive-long-term-growth.html
[2] Mangalindan, J. (2025). Intel to cut 15% of its workforce as it focuses on AI and its core businesses. CNBC. Retrieved from https://www.cnbc.com/2025/04/21/intel-to-cut-15-of-its-workforce-as-it-focuses-on-ai-and-its-core-businesses.html
[3] Lee, T. (2025). Intel to slash jobs, focus on AI as it struggles to keep up with rivals. Reuters. Retrieved from https://www.reuters.com/business/technology/intel-to-slash-jobs-focus-ai-struggles-keep-up-with-rivals-2025-04-21/
[4] Brainard, S. (2025). Intel to cut 15% of its workforce as it shifts focus to AI. The Verge. Retrieved from https://www.theverge.com/2025/04/21/22388730/intel-layoffs-15-percent-workforce-reduction-ai-focus-restructuring-plan-cost-cutting
- In an effort to align with industry trends and drive future growth, Intel Corporation plans to focus more on artificial intelligence (AI), a significant growth opportunity, as stated in the broad restructuring plan announced in 2025.
- Similar to Intel, Microsoft, located in Seattle - the tech hub known for giants like Amazon - is also investing heavily in AI and other technological advancements, reflecting the increasing importance of AI in business today.
- Despite Intel's 15% workforce reduction and focus on AI, the company still faces competition from industry rivals, notably Amazon and Nvidia, with Nvidia leading in the booming field of artificial intelligence, as demonstrated by a market cap of $4.24 trillion compared to Intel's $98.71 billion (as of 2025).
