Intel Corporation is undergoing a sweeping global restructuring, announcing plans to cut its workforce by over 25,000 positions by the end of 2025, bringing its core employee count down to approximately 75,000. This aggressive cost-cutting measure, driven by new CEO Lip-Bu Tan, includes the complete cancellation of previously planned factory projects in Germany and Poland, scaled-back construction in Ohio, and the consolidation of assembly and testing operations from Costa Rica to Vietnam and Malaysia. Facing a challenging market and aiming for efficiency, Intel is adopting a "no more blank checks" philosophy, prioritizing immediate profitability and customer-driven investments to regain its competitive edge in the evolving semiconductor landscape.
A New Era of Lean: Intel's Radical Overhaul
Intel, once the undisputed titan of the chip industry, is embarking on a dramatic and painful restructuring effort. The company has announced plans to slash its global workforce by more than 25,000 employees by the end of 2025, aiming to bring its core headcount down from approximately 99,500 at the end of 2024 to around 75,000. This massive downsizing, representing roughly a quarter of its previous workforce, is accompanied by the outright cancellation of several high-profile international projects and a relentless focus on cost-cutting "down to the last penny."
This aggressive pivot is a clear signal from new CEO Lip-Bu Tan, who took the helm in March 2025, that Intel is making "hard but necessary decisions" to regain financial footing and sharpen its competitive edge in a rapidly evolving market dominated by the rise of AI and fierce competition.
The Scale of the Cuts and Global Impact
The workforce reduction will be executed through a combination of layoffs, attrition, and other strategic measures. While significant layoffs have already occurred in Q2 2025, including a roughly 50% reduction in management layers, more cuts are expected.
The impact of this restructuring extends globally:
Project Cancellations in Europe: Intel has completely abandoned plans for a multi-billion dollar "mega-fab" in Germany that was expected to employ 3,000 people and an assembly and test facility in Poland designed for 2,000 employees. These projects had already been paused in September 2024 but are now officially scrapped.
Consolidation in Costa Rica: The company will scale back and consolidate its assembly and test operations in Costa Rica, affecting over 2,000 of the country's 3,400 Intel employees. These operations will be shifted to existing, larger facilities in Vietnam and Malaysia, signifying a strategic shift in its global manufacturing footprint for efficiency.
Slowdown in US Construction: Construction timelines for new plants in Ohio are being scaled back, reflecting a more cautious approach to capacity expansion.
Impacted Regions: Beyond the specific project cancellations, layoffs are hitting operations across the U.S. (including Oregon, California, Arizona, and New Mexico), Germany, Poland, and Costa Rica.
These moves are part of a broader effort to reduce annual operating expenses. Intel aims to bring down operating expenses from $17.5 billion to $17 billion in 2025, and further down to $16 billion by 2026.
The Rationale Behind the Drastic Measures
CEO Lip-Bu Tan has been vocal about the reasons for this deep restructuring:
Correcting Past Overexpansion: Tan stated that "over the past several years, the company invested too much, too soon—without adequate demand." He criticized previous strategies under former CEO Pat Gelsinger as "excessive and unwise," emphasizing that Intel's factory footprint had become "needlessly fragmented and underutilized."
Focus on Profitability and Efficiency: The new philosophy is clear: "There are no more blank checks. Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution." This signals a strong shift towards economically justifiable investments and disciplined spending.
Responding to Market Pressures: Intel has been struggling to catch up with rivals like Nvidia and AMD in the booming AI chip market and has faced a period of declining revenue and losses. For Q2 2025, Intel reported a net loss of $2.9 billion, which included $1.9 billion in restructuring costs related to the job cuts.
Streamlining Operations: The significant reduction in management layers (approximately 50%) aims to create a "faster-moving, flatter, and more agile organization," reducing internal bureaucracy and accelerating decision-making.
Refocusing on Core Business: Intel has also been divesting from non-core segments, shutting down its automotive chipmaking business in June and spinning off its RealSense computer vision unit in July, to intensely focus on its core client and server chip segments.
Intel's radical restructuring highlights the immense pressure and rapid changes within the global semiconductor industry. While the immediate impact is severe for thousands of employees and various regions, the company believes these "hard but necessary" decisions are crucial for its long-term survival and ability to reclaim its position as a leader in the fiercely competitive AI era.