Intel CEO Lip-Bu Tan has initiated a broad corporate reorganization, confirming upcoming workforce reductions and detailing significant operational changes designed to cut costs and refocus the semiconductor company on engineering execution.
The move, announced internally via a memo to employees on April 24 following a first-quarter earnings report that showed flat revenue and deepening losses, aims to address what Tan described as a company culture hampered by slowness and complexity amid intense market pressures and a disappointing outlook for the coming quarter.
The chipmaker reported Q1 2025 revenue of $12.7 billion, unchanged year-over-year, alongside a GAAP net loss of $0.8 billion, double the loss from the same period last year.
While non-GAAP earnings per share (a measure excluding certain costs) of $0.13 beat guidance, Intel projected Q2 revenue between $11.2 billion and $12.4 billion with non-GAAP EPS expected at $0.00, falling short of analyst expectations and triggering a subsequent drop in the company’s stock price. This difficult financial picture sets the stage for Tan’s corrective actions.
“The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth,” Tan stated during the Q1 2025 earnings call.
Reshaping Intel’s Inner Workings
In his April 24 memo, Tan was direct about the need for internal transformation. “The feedback I have received from our customers and many of you has been consistent. We are seen as too slow, too complex and too set in our ways — and we need to change,” he wrote. The overhaul targets several areas: empowering engineers by clearing “burdensome workflows,” flattening an organization where Tan observed some teams are “eight or more layers deep,” and streamlining internal processes.
This includes cutting unnecessary meetings, making formal internal metrics systems like Insights and OKRs optional, and reducing time spent on non-essential corporate administrative tasks. Tan also explicitly signaled a cultural shift away from rewarding managers based on team size: “I’m a big believer in the philosophy that the best leaders get the most done with the fewest people.”
Furthermore, Tan confirmed an updated return-to-office policy, mandating four days per week on-site for hybrid staff by September 1, 2025. He argued that time together fosters better debate and decision-making, although such mandates can sometimes negatively affect job satisfaction without clear performance gains.
Tightening the Belt and Financial Strategy
Accompanying the structural changes are defined cost-cutting measures. Intel is reducing its operating expense target for 2025 by $500 million to $17 billion and aiming for $16 billion in 2026, generating $1.5 billion in savings over two years across R&D and administrative functions. The company also lowered its 2025 gross capital expenditure forecast by $2 billion to $18 billion, citing operational efficiencies.
These moves are expected to incur further restructuring charges, adding to the $156 million booked in Q1 2025. Underscoring the focus on financial discipline, CFO David Zinsner indicated Intel plans to pause most acquisitions in the near term to prioritize improving its balance sheet.
Workforce Adjustments and Prior Actions
The organizational flattening announced by Tan “will reduce the size of our workforce,” starting in Q2 and progressing over the following months. While Tan used the term “de-laborating” on the earnings call, Intel has not confirmed a specific number or percentage for the reductions. This follows earlier reports that suggested cuts exceeding 20% were imminent – a figure potentially impacting over 21,000 employees based on late 2024 numbers, though Intel has not verified this scale.
The company’s headcount stood at 102,600 as of late March 2025, already down from the end of 2024 due to previous departures and divestitures. These latest planned cuts follow approximately 15,000 job reductions announced back in August 2024.
Building on Earlier Structural Shifts
This week’s announcement builds upon initial changes Tan implemented shortly after becoming CEO on March 12. In mid-April he had already begun streamlining leadership, placing the data center/AI and PC chip divisions under his direct oversight.
An earlier memo noted Tan’s intent: “I want to roll up my sleeves with the engineering and product teams so I can learn what’s needed to strengthen our solutions.”
He appointed Sachin Katti as a combined Chief Technology Officer and Chief AI Officer, whose expanded role involves leading Intel’s overall AI strategy and roadmap – a domain where the company has faced difficulties gaining traction with its Gaudi accelerators against competitors and adjusted plans after canceling its Falcon Shores chip project earlier in the year.
The internal restructuring occurs as Intel faces continued external and operational difficulties. The company is working to bring its 18A manufacturing process – its ~1.8nm class node featuring newer RibbonFET gate-all-around transistors and PowerVia backside power delivery for improved performance and density – online to support its foundry ambitions.
This task is complicated by delays pushing the operational start of its major Ohio factory project to at least 2030. Furthermore, any prospect of leaning on competitor TSMC, which reported strong Q1 results, for manufacturing assistance was firmly dismissed on April 17 when TSMC CEO C.C. Wei stated unequivocally, “TSMC is not engaged in any discussion with other companies regarding any joint venture, technology licensing or technology.”
This denial, following earlier rumors of potential partnerships, reinforces the narrative that Intel must rely primarily on its own internal execution and the success of Tan’s restructuring efforts to navigate its path forward after posting an $18.8 billion net loss for 2024.
