Intel, the Silicon Valley chip giant, is set to announce plans this week to lay off over 20% of its workforce, a move aimed at streamlining operations and eliminating bureaucratic inefficiencies. According to Bloomberg News, the layoffs are part of a broader restructuring strategy to refocus the company on an engineering-driven culture and enhance its competitiveness in the fast-evolving semiconductor industry.
The job cuts, which are expected to affect thousands of employees, come under the leadership of Intel’s newly appointed CEO, Lip-Bu Tan. Tan, who took over last month, is tasked with reviving the struggling company after years of challenges. His appointment follows a period of declining performance, with Intel facing growing competition from companies like Nvidia in key areas such as artificial intelligence (AI) and chip manufacturing.
Intel’s workforce reduction is part of a larger cost-reduction initiative, aimed at saving $10 billion this year. This follows a previous round of layoffs in August 2023, when Intel cut 15% of its workforce, amounting to approximately 15,000 positions. These efforts are being driven by rising operational costs, shrinking margins in Intel’s core PC and data center segments, and the expensive pivot to AI chips, a market where Intel has lagged behind rivals.
In a town hall shortly after his appointment, Tan outlined the need for “tough decisions,” signaling the company’s intention to address what he described as a slow-moving and bloated middle management layer. As part of the restructuring, Intel is flattening its leadership team, with key chip groups now reporting directly to Tan.
The planned layoffs come at a critical time for Intel, which is scheduled to report its first-quarter results later this week. As of late 2024, the company employed 108,900 people. With the focus now shifting toward AI and more efficient operations, the coming weeks will reveal how these strategic changes will impact Intel’s future and its ability to compete with industry leaders.
