Introduction: A Leaner Intel for a Competitive Future
On July 25, 2025, Intel CEO Pat Gelsinger announced a 15% workforce reduction, cutting approximately 21,000 jobs from a total of 96,000 employees as of June. Most layoffs occurred in Q2, with plans to reduce headcount to 75,000 by year-end. Alongside this, Intel streamlined management by 50% and will enforce a return-to-office policy in September, ensuring all facilities are fully operational. These moves aim to boost efficiency, cut costs, and reposition Intel in a competitive AI-driven market.
Strategic Priorities: Foundry, x86, and AI #
Gelsinger outlined three core focuses in a memo to employees: transforming Intel into a financially disciplined foundry, revitalizing the x86 ecosystem, and advancing its AI strategy.
1. Foundry Discipline: Scaling Back Expansion #
Intel’s foundry business has faced challenges from premature overinvestment, leading to underutilized and fragmented facilities. To address this, Gelsinger halted foundry projects in Germany and Poland, consolidated assembly and testing in Vietnam and Malaysia, and slowed Ohio factory construction to align with customer demand. Investments in the Intel 14A process will now require confirmed customer commitments, with Intel reserving the option to exit the foundry business or outsource if external demand for 14A falters. The Intel 18A process, however, is on track for mass production, targeting clients like the U.S. government to attract broader adoption.
2. Revitalizing x86: Streamlined Designs and SMT Return #
To regain market share in client and server segments, Intel is prioritizing Panther Lake, a CPU on the Intel 18A process, set to debut in late 2025, and advancing Nova Lake for high-end desktops. Gelsinger reinstated Simultaneous Multi-Threading (SMT) for data center chips to close competitive performance gaps. To enhance efficiency, all major chip designs now require Gelsinger’s personal approval before tape-out, ensuring concise architectures, optimized costs, and streamlined SKUs.
3. AI Strategy: A Unified Approach #
Intel is shifting from a chip-centric AI approach to a collaborative strategy integrating chips, systems, and software. The focus is on inference and agent AI technologies, designing solutions from emerging workload demands. Detailed plans will be shared soon, positioning Intel to compete in the AI-PC and data center markets.
Financial Context and Cultural Shift #
Intel’s Q2 2025 financials reported $12.9 billion in revenue, beating expectations, but a $2.9 billion loss highlighted ongoing challenges. The layoffs follow a $10 billion cost-cutting initiative started last year, with further reductions this year. Gelsinger’s reforms aim to eliminate bureaucracy, empower engineers, and foster a faster, more agile Intel. A Q3 loss of 24 cents per share is projected, exceeding Wall Street’s 18-cent forecast, yet Intel’s stock rose over 8% this year, with a 3% after-hours surge post-earnings, reflecting investor confidence in the restructuring.
Conclusion: Navigating Challenges with Bold Reforms #
Intel’s 21,000 layoffs and strategic overhaul signal a critical pivot under Gelsinger’s leadership. By streamlining operations, refocusing on x86 and AI, and enforcing financial discipline in its foundry business, Intel aims to reclaim its edge in a competitive landscape. While financial pressures persist, these reforms position Intel for a leaner, more innovative future, with 2025 as a pivotal year for transformation.