In a decisive restructuring move, Intel Corporation has announced a sweeping 15% reduction in its global workforce and the suspension of several high-profile chip expansion projects, marking one of the company’s most significant strategic pivots in recent years.
The cost-cutting measures are part of Intel’s broader plan to stabilize its finances and accelerate investment in artificial intelligence (AI). According to multiple reports, the layoffs will affect more than 7,500 employees globally and are expected to be implemented in phases through the end of 2025.
This development follows Intel’s disappointing financial performance in recent quarters. The chipmaker has been battling intensifying competition, sluggish demand, and delays in rolling out next-generation chip technologies, all while trying to stake a competitive claim in the fast-evolving AI ecosystem.
Steep Losses Force Tough Decisions
Intel’s financial troubles have been mounting for over a year. According to its latest earnings guidance, the company forecasts steeper losses than initially expected for the remainder of 2025. It also plans to reduce capital expenditures significantly, including the suspension of multibillion-dollar chip fabrication plant expansions across key locations in the U.S. and Europe.
CEO Pat Gelsinger described the layoffs as “deeply painful but necessary,” emphasizing that Intel must shift focus from legacy infrastructure to future-ready innovation. “We are at a critical inflection point,” he stated. “Our goal is to streamline operations, reduce costs, and reallocate resources to our highest strategic priorities—chiefly AI.”
The company’s revised roadmap indicates a reduction of at least $3 billion in operating costs by 2026, with more emphasis on AI software, edge computing, and power-efficient chip design for enterprise applications.
AI Front and Center
Intel’s pivot toward AI comes amid a broader industry shift. Rivals like Nvidia, AMD, and ARM have surged ahead with specialized AI chips and cloud infrastructure integrations, challenging Intel’s traditional dominance in central processing units (CPUs).
In response, Intel has been ramping up investments in its Gaudi AI accelerator chips, as well as partnering with cloud and data center providers to offer customized AI workloads. However, industry analysts believe the company still faces an uphill battle in catching up with more agile competitors.
“The AI race is no longer about who makes the fastest chip—it’s about who can offer end-to-end AI compute stacks,” said a senior analyst at TechInsights. “Intel needs to rethink not just its product lineup but its entire go-to-market strategy.”
The layoffs are expected to affect multiple verticals within Intel’s business, including manufacturing, administrative, and R&D divisions, as the company restructures to better align with AI-driven market demand.
Suspension of Expansion Plans
A key component of Intel’s retrenchment involves pausing or cancelling major chip foundry projects. The company had previously committed billions in expansion plans across Arizona, Ohio, Germany, and Ireland, aiming to position itself as a global leader in semiconductor manufacturing amid geopolitical tensions and supply chain shifts.
However, those ambitions have now taken a backseat.
Intel cited inflationary pressures, supply-side disruptions, and waning demand as reasons for the delays. The decision also reflects the company’s attempt to reduce capital intensity and shift to a “more asset-light” model, potentially relying more on third-party chip fabricators like TSMC in the future.
Mixed Market Reaction
The announcement of job cuts and suspended projects has received mixed reactions from investors. While some see it as a necessary reset to protect long-term profitability, others remain skeptical about Intel’s ability to regain its market leadership in a fast-changing tech landscape.
Shares of Intel dipped slightly following the news but remained relatively stable as markets had anticipated some form of organizational shake-up.
Employee Concerns and Transition Plans
Intel has stated that it will offer severance packages, retraining options, and outplacement support to affected employees. However, internal sources suggest that morale within the company is low, especially as teams await further clarity on which roles will be impacted in the next round of cuts.
Gelsinger has reaffirmed that Intel remains committed to its U.S. manufacturing base and global innovation centers. “We are not abandoning our chip leadership goals,” he noted. “We are recalibrating how we achieve them in an AI-first world.”
Intel’s sweeping restructuring is a clear signal that even legacy tech giants must adapt swiftly to the changing tides of innovation. With AI at the center of its new strategy, the company faces a critical period of transformation—one that could redefine its position in the global semiconductor and AI ecosystem.