Intel cuts 20% of workforce: Can Lip-Bu Tan’s AI bet resurrect a stumbling Intel?

Intel has announced a workforce reduction of over 20%, impacting more than 21,000 employees, as part of a restructuring led by new CEO Lip-Bu Tan, per Bloomberg.

With a $19 billion loss in 2024 and revenue falling to $53.1 billion, the chipmaker aims to streamline management, cut $10 billion in costs, and refocus on AI chips and foundry services, competing with Nvidia, AMD, and TSMC, the report said.

Tan’s restructuring, the biggest workforce reduction in the chipmaker’s history, follows 2024’s layoff that impacted 15,000 employees, bringing the headcount down to 108,900 from 124,800. The current cuts, targeting middle management, reflect Tan’s push to restore an engineering-led culture and reposition Intel amid mounting pressure. Once a semiconductor icon, Intel is undergoing a radical shift to meet AI-driven demands and modern IT infrastructure needs.

In his efforts to streamline Intel, Tan is shedding non-core assets, starting with the sale of a 51% stake in Altera to Silver Lake. He said the move reflects Intel’s commitment to sharpening its focus and lowering its expense structure. Tan also highlighted the need to rebuild engineering talent, strengthen the balance sheet, and better align manufacturing with customer demands.

Intel’s recent promotion of Sachin Katti to CTO and AI chief reflects urgency to close the AI gap, though analysts view these executive changes as part of a “monumental uphill battle.” 

These moves mirror a broader trend in tech, with more than 22,000 jobs cut in 2025 alone, continuing the 2024 wave of layoffs. The shift towards cost-cutting and AI automation signals rapid changes in the industry.

Remaking a chip giant

The global semiconductor market is undergoing a dramatic shift, driven largely by the AI boom. As per Gartner, it hit $655.9 billion in 2024 — up 21% from 2023. Nvidia climbed to the top spot, dethroning both Samsung and Intel, thanks to explosive demand for its GPUs, now powering most AI workloads.

Intel now faces a steep climb and is making bold moves to reclaim relevance. Analysts view these steps as painful but necessary to tackle long-standing issues like high costs and sluggish decision-making.

“Intel has recognized the need to become more agile,” says Kanisha Chauhan, senior principal analyst at Gartner. “These staff reductions appear to be more than just cost-cutting—they’re aimed at realigning the company with that goal.”

Faisal Kawoosa, co-founder of Techarc, agrees: “Intel is trying to reorient itself with the IDM 2.0 strategy — to double down on core strengths and become the world’s No. 2 foundry player by 2030.”

These cuts are painful but necessary if Intel is to realign for the future, according to Deepak Gupta, Semiconductor & EDA Expert. Still, the path won’t be easy.

“While leadership wants to work more closely with engineers to cut delays and spark momentum, these changes also bring uncertainty and anxiety among employees, which can stifle innovation,” Gartner’s Chauhan said, highlighting the risks that come with such large-scale restructuring.

The path ahead for a lost icon

Looking beyond cost cuts, Intel’s next chapter will depend on how effectively it can sharpen its focus and embrace disruption. According to Techarc’s Kawoosa, the company must boost efficiency in its core strength — laptop processors — while exploring high-growth areas like connected cars and maintaining momentum in the server market. “Somehow the innovation wheel has stalled,” he noted, adding that Intel might benefit from an inorganic push, possibly through strategic acquisitions of promising startups.

According to Gupta, the layoffs reflect “deeper strategic gaps” that have widened over the years, particularly in AI and advanced manufacturing.

Gartner remains cautiously optimistic. While Intel still lags in the AI race, Gartner’s Chauhan said Intel’s renewed priorities could start bearing fruit in the coming years if it stays the course.

The push to become the world’s second-largest foundry by 2030 is central to Intel’s IDM 2.0 strategy. The layoffs, though painful, are part of this reset. “If Intel sticks to its five-year plan,” Kawoosa said, “the results will start to show.”

Intel is rewriting its playbook — moving away from a sprawling, do-it-all model to a sharper focus on what it does best: chip fabrication. By shedding legacy functions and narrowing its scope, the company is betting on agility and specialization. “It’s a big shift,” Kawoosa said, “but maybe it’s exactly what Intel needs to stay relevant—and even thrive—in a future shaped by AI.”