Intel is slated to fire more than 20% of its staff this week in a bid to eliminate bureaucracy. The struggling chipmaker had ended 2024 with 108,900 employees after slashing around 15,000 jobs in August last year. The layoffs also mark the first major move under new CEO Lip-Bu Tan, who took over last month to revive the struggling Silicon Valley chipmaker after years of challenges.
According to a Bloomberg report, the announcement is likely to be made this week as part of a revival plan by newly appointed CEO Lip-Bu Tan. It will eliminate around 20,000 positions within the company as it aims to simplify operations and rebuild an engineering-driven culture. Intel has seen three straight years of sales decline as it lost ground to rivals such as Nvidia Corp in artificial intelligence computing and other areas.
Reuters had also reported last week that Tan was restructuring the company by flattening its leadership team — with key chip groups now reporting directly to him. The new trajectory involves restructuring the AI strategy of the company and implementing staff cuts to address what he described as a slow-moving and bloated middle management layer.
The CEO had indicated at the end of March that the company would spin off assets that were not central to its mission and create new products — including custom semiconductors — as it made a bid to regain lost ground. He had also stressed the need for the ailing chipmaker to replace engineering that it had lost, improve the balance sheet and become better attuned to manufacturing processes. Shortly after his appointment, he told employees in a town hall that the company will have to make “tough decisions”.
The yet-to-be-announced layoffs also come mere days after the company agreed to sell a 51% stake in its programmable chips unit Altera to Silver Lake Management. The $4.46 billion deal will provide the company with much-needed cash after hefty bets on contract manufacturing by former CEO Pat Gelsinger strained its finances. It is however pertinent to note that the deal values Altera at just $8.75 billion — compared to the nearly $17 billion Intel paid in 2015.