Intel’s new CEO signals streamlining efforts but does not spell out exact layoff numbers

Lip-Bu Tan, the new CEO of Intel, sent a blunt message to employees and said the company should reorganize to be more efficient. He said there would be a reduction of employees, but he has not announced an exact number of dismissals as expected.

Bloomberg reported that Intel is said to be preparing for the dismissal of as much as 20% of his employeesThat was around 108,900 people at the end of 2024. A reduction of 20% would be around 21,780 lost jobs. And although the changes that Tan announced today can lead to significant cuts that would start in the second quarter, he did not describe the expected figures.

Tan’s Letter to employees coincided with the release of Q1 2025 quarterly numbers. For the income, Tan said: “It was a step in the right direction when we delivered income, gross margin and profit per share (profit per share) above our guidance, driven by [former interim co-CEOs Dave Zinsner and Michelle Johnston’s] leadership. I want to thank them both and all of you for the good version. “

But he quickly warned: “We have to build on this progress and it will not be easy. We navigate through an increasingly fierce and insecure macro-economic environment, which is reflected in our Q2 front views. Moreover, there are many areas where we have to improve.

“There is no way to circumvent the fact that these critical changes will reduce the size of our workforce. As I said when I became a member, we have to make a number of very difficult decisions to put our company on a solid foot for the future. This starts in Q2, and we will move as quickly as possible.”

In his letter Tan said that Intel had not set a target reduction goal.

“What we have established is a new non-Gaap operational cost objective of around $ 17 billion in 2025, compared to our previously indicated goal of $ 17.5 billion and $ 16 billion in 2026,” he said. “There is no way to circumvent the fact that these critical changes will reduce the size of our workforce. As I said when I became a member, we have to make a number of very difficult decisions to put our company on a solid foot for the future. This starts in Q2 and we will move as quickly as possible in the coming months.”

Tan’s look at Intel’s culture

Tan inherited a difficult situation because Intel has lost on the AI/Graphics market from Nvidia and on the X86 processor market to advanced micro devices. He has not chopped words about criticizing the culture of Intel as a large company.

“As I said, this starts to renew our culture. The feedback I have received from our customers and many of you have been consistent. We are seen as too slow, too complex and set on our ways – and we have to change,” he wrote.

He said the “Flatter Executive Team (ET) structure that I shared last week was a first step.” The next step is to stimulate more simplicity, speed and cooperation throughout the company, he said. And so he has changes. Among them: making the company’s AI strategy again, Tan said in an analyst call. He also said that the financial performance of Intel is not where it should be and that Intel would reduce its capital expenditure.

He also said that Intel Intel Capital would not distract and invest in external companies. Intel sells 51% of his Altera Program Ble Logic Division to Silver Lake Partners. Altera has a value of $ 9 billion, so that deal will generate considerable money for Intel.

“We have to go back to our roots and enable our engineers. That is why I have increased our core technical functions to the ET. And many of the changes we will drive have been designed to make engineers more productive by removing heavy workflows and processes that slow down the pace of innovation,” Tan said.

In order to make the necessary investments in Engineering Talent and Technological Route Cards, Intel must find new ways to lower the costs, he said.

“Although we have taken important promotions in the past year, our current cost structure is still well above competing benchmarks. With that, we have reduced our goals for operating costs and capital expenditure that I will discuss during our investor call this afternoon,” he said.

“While we repeat ourselves on Engineering, we will also remove the complexity of the organization. Many teams are eight or more layers deep, which creates unnecessary bureaucracy that delays us. I asked the ET to take a fresh look at their respective organs, with a focus on removing layers, raising our executions,”.

As a long -term chip engineer, it is no surprise that TAN is aimed at enabling engineers to do more. He wrote: “I am surprised to hear that in recent years the most important KPI has been the size of their teams for many managers at Intel. In the future this will not be the case. I am a strong proponent of the philosophy that the best leaders get the most done with the least people.

He said that the company would enable smaller teams to move faster and make better decisions and to reduce the number of layers in the way. He said that Intel would balance the reductions against the need to preserve and recruit important talent. He said he would keep the team informed.

Streamlining processes

Tan said that the eye opening was for him to see how much time and energy is spent on internal administrative work that the company does not move ahead.

“We have to simplify this radically to maximize the time to our customers,” he said.

“I instruct our leaders to eliminate unnecessary meetings and to significantly reduce the number of attendees of the meeting. Too much valuable time is wasted. We will also modernize processes with a focus on live dashboards and better data to ensure that we need the real -time insights that we need to” write better and faster decisions.

One of the things he makes optional is Intel’s traditions of formal insights and OKR -requirements. He thinks it will remain responsible and feedback can be done in a simpler and more flexible way.

He said that the company will work at the office four days a week, instead of the current requirement on site three days a week. The four -day plan plan will take effect on 1 September 2025.

He said: “I realize that this is a lot to take, but we play from behind and we have to gather like a team to place ourselves in the best possible position to win.”

It is a pretty difficult medicine, and no different than the difficult policy that Intel’s former old CEO, Andy Grove, would do.

I am talking about the possibility of fundamentally reinventing an industrial icon. To get a comeback that will be studied at Business Schools for generations. To create and implement new technologies to change the world for the better.

“Intel was once generally seen as the world’s most innovative company. There is no reason why we can’t come back there, as long as we start the changes needed to improve,” Tan wrote. “It will be difficult. It will require painful decisions. But we will let them know that this is what we have to do to better serve our customers while we build a new Intel for the future – and I have a lot of confidence in the power of our team and our people to make it happen.”

While closing, he thanked employees “for everything you did in Q1.” In an analyst call, he noted that he was joined five weeks ago. He replaced the interim bosses and former CEO Pat Gelsinger, who resigned in December 2024.

Tan said that his motto should be promised and realized too much, and he would not rest until Intel regained the confidence of his customers. Intel said that rates would certainly influence its activities, partly because of the caution it would generate with customers.