Chip giant Intel to shrink headcount by 25,000 this year, posts $3.7 billion quarterly loss

NEW YORK - Intel, the ailing semiconductor giant, said on July 24 that it expects its workforce to shrink by more than 25,000 employees in 2025 as the company continues searching for a turnaround.

The chipmaker, which reported 108,900 employees at the end of 2024, said it now expects layoffs, attrition and other actions to reduce its headcount to 75,000 by the end of 2025.

Intel also disclosed it will no longer move forward with plans to build factories in Germany and Poland, further slow the pace of new factory construction in Ohio and consolidate operations in Costa Rica to larger sites in Vietnam and Malaysia.

Intel had signalled the need to cut costs in April. On July 24, it said it had cut its workforce since then by about 15 per cent, which indicates around 15,000 people were affected. The latest cuts follow a reduction of more than 15,000 jobs in 2024.

Intel quantified the cuts while releasing financial results for its second quarter, posting a US$2.9 billion (S$3.7 billion) net loss that included restructuring charges from the latest belt-tightening. Revenue was roughly flat at US$12.9 billion, which was higher than analysts predicted.

The company projected another loss in the current quarter and revenues of US$12.6 billion to US$13.6 billion, indicating a US$13.1 billion midpoint that compares with analysts’ average prediction of US$12.6 billion for the period ending in September.

“I know the past few months have not been easy,” said Mr Tan Lip-Bu, Intel’s chief executive, in a letter to employees. “We are making hard but necessary decisions to streamline the organisation, drive greater efficiency and increase accountability at every level of the company.”

Once one of Silicon Valley’s most profitable big companies, Intel rode to prominence in the 1990s on sales of microprocessor chips that act as electronic brains in personal computers. But the company missed the smartphone boom and has failed to capitalise on torrid demand for chips used in artificial intelligence, a field dominated by Nvidia.

Mr Tan, a venture capitalist and former Intel board member, was named CEO in March. He has pushed to reduce bureaucracy, speed up innovation and make Intel’s products more competitive with rivals like Advanced Micro Devices. He has said that progress may not come quickly.

Analysts have been focused on signs about the health of Intel’s latest production process, which determines the computing performance of microprocessors. Mr Patrick Gelsinger, the former CEO who was forced out in December, had believed that a new technology, called 18A, would bring Intel at least into parity with the most advanced chips produced by the rival Taiwan Semiconductor Manufacturing Company.

Intel executives no longer make that claim. But the 18A technology is still important to deliver upgrades to Intel’s own line of microprocessors. Mr Tan, during a conference call with analysts, said the company was also working on a successor production process called 14A while not repeating past mistakes of building factories to roll it out without commitments from external customers.

“Over the past several years, the company invested too much, too soon – without adequate demand,” he wrote in the letter to employees. “In the process, our factory footprint became needlessly fragmented and underutilised. We must correct our course.”

“There are no more blank cheques,” Mr Tan wrote in the memo. “Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution.” NYTIMES