Are there signs of the end at Intel? or at least of a dramatically less important Intel? (And is this why AMD is running up, or are there some other drivers as well?) Seriously, I can’t see how Intel gets itself out of this one, given their track record in the Gelsinger era. If they manage it, Lip-Bu Tan might as well change his name to Lazarus…
On the staffing side, the cutting will continue until they hit 75K employees…
During the conference call with analysts and investors, Tan revealed a lot about the company’s future, including its plans to change strategies for AI, foundry, core x86 businesses, and even organization and culture. He also revealed that the transformation of the company involves cutting its workforce to 75,000 by the end of the year, which means that the company will have laid off over 30,000 people by the end of 2025.
“Over the last three months, I have completed a systematic review of every organization and function reporting to the CEO,” he said. “These reviews included detailed analysis of headcount, skillset, spending, site distribution, executive population, and restructuring plans. We have much work to do in building a clean and streamlined organization, which we have started. […] Our goal is to reduce inefficiencies and redundancies and increase accountability at every level of the company. We need to right-size and scale back the company while ensuring that we are retaining our best internal talents and hiring the best external talents from industry and universities. During Q2, we completed the majority of the actions needed to achieve our year-end target of 75,000 employees. […] These actions are necessary not just to reduce our operating expenses, but to make the company more agile, collaborative, and vibrant to simplify our business and improve our product and process execution.”
On the strategy side, big shifts in foundry-land…
Tan outlined a major shift in Intel’s foundry and CapEx strategy, moving away from massive investments in capacity that were common for Intel in recent years. He acknowledged that Intel’s past approach — building massive capacity far ahead of actual demand — was ‘unwise and excessive,’ leading to a ‘fragmented factory footprint’ and underutilized fabs. Instead of expanding based on internal forecasts, Intel will tie capacity and capital spending strictly to volume commitments and milestone-based triggers, which promises to ensure that investment aligns with both customer needs and financial returns.
“I do not subscribe to the belief that if you build it, they will come,” said Tan. “Under my leadership, we will build what customers need, when they need it, and earn their trust through consistent execution.”
To reinforce this disciplined approach, Intel has cancelled (or halted?) its manufacturing projects in Germany and Poland, is consolidating its assembly and test operations in Costa Rica, and will slow construction pace in Ohio, though retain the flexibility to accelerate if needed.
On the process technology front, Tan reaffirmed Intel’s commitment to 18A, the node to be used for at least three generations of Intel’s consumer and server products, including Panther Lake, Clearwater Forest, and Diamond Rapids. The company’s chief financial officer, Dave Zinsner, acknowledged that Intel does not expect loads of foundry customers with 18A, yet the company still positions the production node for both Intel’s products and external customers.
The CEO of Intel also emphasized that Intel 14A will be the company’s first foundry-first node, designed in collaboration with external customers and tailored to meet their specific performance and cost needs. However, Tan made it clear that future investments will be contingent on Intel’s ability to secure external demand and deliver return on capital, rejecting the notion of building on expectations.
As a result, if Intel does not find at least one major external customer for 14A, the company may abandon or slow down its development and cease investments in 14A-capable capacity, which will essentially mean that Intel will cease developing leading-edge process technology and will produce its most advanced products at external foundries. This marks a significant philosophical transformation of Intel and highlights that Tan is at least considering much deeper changes at Intel than initially thought. But, for now, Intel remains committed to developing 14A.
“18A is important to us for the three generations of internal products, and then when we are ready, then we can go outside with more confidence to get a customer to support us,” Tan said. “And then on the 14A, same as the A14 from TSMC, the timing is all in 2028 – 2029.”
