Intel: New Products Must Deliver 50% Gross Profit To Get the Green Light

Intel has implemented a strict new policy requiring all new projects to demonstrate at least a 50% gross margin to move forward. CEO Lip-Bu Tan explained Intel's new risk-averse policy as 'something that we probably should have had before,' later clarifying that the number is a figure the company is aspiring toward internally. Tom's Hardware reports: Tan is reportedly 'laser focused on the fact that we need to get our gross margins back up above 50%.' To accomplish this, Tan is also said to be investigating and potentially cancelling or changing unprofitable deals with other companies. Intel's margins have slipped to new lows for the company in recent months. MacroTrends reports Intel's trailing 12 months gross margin for Q1 2025 was as low as 31.67%. Intel's gross margins had hovered around the 60% mark for the ten years leading up to the COVID-19 pandemic, falling beneath 50% in Q2 2022 and continuing to steadily fall ever since.

Holthaus predicts a 'tug-of-war' to ensue within Intel in the coming months as engineers and executives reckon with being forced between a rock and a hard place. 'We need to be building products that... fit the right competitive landscape and requirements of our customers, but also have the right cost structure in place. It really requires us to do both.' Tan is also quoted as wanting to turn Intel into an 'engineering-focused company' again under his leadership. To reach this, Tan has committed to investing in recruiting and retaining top talent; 'I believe Intel has lost some of this talent over the years; I want to create a culture of innovation empowerment.' Maintaining a culture of empowering innovation and top talent seems, on its face, at odds with layoffs and a lock on projects not projected to gross 50% margins, but Tan seemingly has Intel investors on his side in these pursuits.

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