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A few days ago, Naga Chandrasekaran, Intel’s vice president of manufacturing, wrote his employees, “We are making these decisions based on careful consideration of what’s needed to position our business for the future.” He said the board of directors plans to reduce the workforce by 15% to 20%, with most cuts coming in July.
Intel faces challenges that far exceed those in its more than half-century history. Since the mid-2000s, the Taiwanese company TSMC has maintained its leadership in the integrated circuit manufacturing industry. Meanwhile, the PC market’s stagnation and Intel’s slow entry into the AI sector have placed the company in a difficult position.
In July 2024, under CEO Pat Gelsinger’s leadership, Intel took a tremendous hit on the stock market. Its shares dropped 30% in a few days and stabilized at their 2011 value. Intel also posted a $1.6 billion loss in the second quarter of 2024, and its year-over-year revenue declined by 1%. These events triggered a crisis that still continues.
This Cutback Will Inevitably Affect Intel’s Factories
On Aug. 2, Intel announced a restructuring plan aimed at cutting costs and boosting agility in the face of current market challenges. The plan included laying off 15% of the workforce—more than 15,000 employees—and cutting costs by approximately $10 billion. Shortly before the announcement, Gelsinger said Intel had become inefficient due to an overly complex structure.
Gelsinger himself didn’t survive the restructuring. He left the company Dec. 2, leaving its future uncertain until March 18, when Lip-Bu Tan—a veteran physicist and nuclear engineer—took over leadership. Tan confirmed that two pillars of his strategy include strengthening Intel’s position in the AI market and reestablishing the company as a leader in integrated circuit manufacturing.
It’s too early to assess how this will affect Intel’s factory competitiveness and performance.
Shortly after Tan’s arrival, reports surfaced that he was planning another round of layoffs, aiming to reduce operating expenses, including those related to personnel and marketing. The company is considering cutting 20% of its workforce—approximately 20,000 employees. This follows the more than 15,000 layoffs in late 2024.
Now, more details have emerged. According to a statement Chandrasekaran sent to Intel employees four days ago, between 8,000 and 10,900 factory workers around the world will lose their jobs in the coming weeks. The company’s largest plant in Oregon will likely be the most affected. It’s too early to determine how this will affect Intel’s competitiveness and performance, but the scale of the layoffs suggests a profound impact on its production infrastructure.
Image | Intel
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