Intel's Radical Restructuring: 24,000 Layoffs and Global Retreat Signal Semiconductor Strategy Shift

Intel's transformation under CEO Lip-Bu Tan has taken a drastic turn, with the chip giant revealing plans to eliminate approximately 24,000 jobs in 2025 while retreating from ambitious international expansion projects. The strategic downsizing—equivalent to a quarter of Intel's core workforce—comes as the company confronts overcapacity, fragmented operations, and disappointing growth in the AI boom that has fueled rivals.

Manufacturing Retreat Goes Global

Intel's contraction spans continents:

• Germany & Poland: Canceled "mega-fab" projects that promised thousands of jobs, despite earlier pauses
• Costa Rica: Assembly/test operations shifting to Vietnam, affecting over 1,400 positions
• Ohio: Construction slowdown at new $20B chip complex pending market demand

The moves reverse years of aggressive fab expansion. As Tan stated in the Q2 earnings call:

"I do not subscribe to the belief that if you build it, they will come. Under my leadership, we will build what customers need when they need it."

Deeper Cuts, Deeper Losses

Financial results underscore the urgency:

• $2.9B quarterly loss despite $12.9B revenue
• Data center growth stalled at 4% YoY ($3.9B)
• PC chip sales down 3% ($7.9B)
• Foundry revenue up modestly 3% ($4.4B)

The restructuring costs ($1.9B) contribute to losses, but Tan claims the company is on track for $17B in annual expense reductions.

Engineering Overhauls and Future Bets

Tan is implementing strict controls to avoid past mistakes:

• Personal review required for all major chip designs before tape-out
• Panther Lake CPUs on track for 2025, Nova Lake for late 2026
• New data center leadership coming next quarter

The CEO emphasized correcting "past mistakes regarding multi-threading capabilities" in performance cores—a nod to architectural struggles that hampered competitiveness.

The Semiconductor Reckoning

This scale of retrenchment reflects Intel's struggle to balance manufacturing ambition with market realities. While rivals like TSMC and Samsung aggressively captured AI chip demand, Intel's "build-first" strategy left it with underutilized fabs. The consolidation signals a fundamental shift from empire-building to precision scaling—a necessary but painful evolution as the U.S. chip giant fights to reclaim process leadership and relevance in the AI era.

Source: The Verge | Reporting by Sean Hollister