Intel allegedly plans imminent lay off of thousands of employees to fuel turnaround

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Anonymous sources say the announcement could be just days away.

Intel's headquarters in Santa Clara, Calif.
(Image credit: Intel)

According to "people familiar with the company's plans," Intel may soon eliminate thousands of jobs to decrease costs and fund an ambitious attempt to rebound from recent earnings slumps and market share losses. The reports, from anonymous sources familiar with the company’s plans, tell Bloomberg the announcement could come as early as this week.

According to Bloomberg, Intel CEO Pat Gelsinger has been "spending heavily on research and development projects." The extra spending is hoped to enhance Intel’s technology and regain its prominence in the semiconductor industry. The company has lost ground to rivals, including AMD and Nvidia.

Intel allegedly needs to eliminate thousands of existing jobs to continue funding its R&D and manufacturing projects. Intel employs approximately 110,000 people at present, not counting workers at spun-out units. The last time Intel had a large workforce reduction was announced in October 2022 and completed in 2023. During that round of mass layoffs, Intel laid off about 5% of its employees.

To pull off such a rebound, Intel needs to improve its technology in key areas. Not only has AMD caught up and begun taking market share in CPUs, but chipmakers led by Nvidia currently dominate the development of semiconductors for artificial intelligence-related tasks.

Sources say Gelsinger believes Intel can improve its technology and regain its dominance. He’s been developing a plan to build factories that will manufacture semiconductors for other chipmakers. Recently, Intel hired former Micron executive Naga Chandrasekaran as chief global operations officer. Chandrasekaran will lead Intel Foundry’s global manufacturing operations and strategic planning.

Intel is scheduled to report second-quarter earnings on Thursday, August. 1. Analysts project Intel to report flat revenue for the second quarter compared to the previous year. Wall Street estimates Intel’s sales will increase modestly during the second half of 2024 and increase 3% to $55.7 billion for 2024. That will mark Intel’s first annual revenue increase since 2021.

Whether Intel will announce the layoffs before the earnings call on Tuesday remains to be seen. However, Bloomberg noted that Intel’s shares rose by roughly a percentage point in late trading after the news first broke. If analysts and investors see Intel’s layoffs as good for the company’s future, it could bolster the company’s trading even if the earnings call reports flat revenue for the quarter year-over-year.

Tom's Hardware contacted Intel for comment on the layoff reports. The company declined to comment.

Jeff Butts
Jeff Butts
Contributing Writer

Jeff Butts has been covering tech news for more than a decade, and his IT experience predates the internet. Yes, he remembers when 9600 baud was “fast.” He especially enjoys covering DIY and Maker topics, along with anything on the bleeding edge of technology.

29 Comments Comment from the forums
  • bit_user
    My condolences to all affected by this move. Unless the layoffs come from cancelled projects, it doesn't make much sense to me, since it seems to me that most of Intel's major problems have stemmed from execution failures:
    the 10 nm fiasco
    Sapphire Rapids' years of delay
    Ponte Vecchio's delay & yield problems
    Alchemist dGPU's delay and underperformance
    cancellation of Meteor Lake-S
    now this Raptor Lake degradation debacle
    I hoped Gelsinger would right the ship and get the problems sorted out that have been hampering Intel's ability to execute, but I think Wall St. is more of a "Mr Right Now" than "Mr Right", when it comes to Intel's long term best interests. With profits sagging, investors probably demanded something be done. Let's hope it doesn't come at too high a cost, long-term.

    I wonder if the biggest competitive advantage AMD has over Intel is merely the fact that they haven't paid out dividends. IMO, dividends attract the wrong kind of investor, when you have a high tech business that requires substantial reinvestment in R&D, with long lead times.
    Reply
  • rm12
    maybe the savings can be used for the rma program that is coming up ... such a big layoff will certainly cloud some of the issues concerning the quality of their products
    Reply
  • -Fran-
    Papa needs a pay cut.

    Regards :)
    Reply
  • watzupken
    I think Intel sat on its own success for way too long, not expecting competitors to hit them back fast and furious. In my opinion, Intel have been tripping over themselves over time and again in recent years as they scramble to course correct. Their products are generally delayed for too long, and not competitive. I am a user of Intel CPUs and also using an Arc A770. The latter for example was delayed way too long and no surprises, by the time they launch it, they are 1 generation behind their competitors to be truly competitive. Recent events don't help Intel as well, such as the way they are handling the Raptor Lake issue, and also the use of TSMC 3nm for their Lunar Lake CPUs. On the surface, they may look harmless, but in reality, I feel it is damaging to their CPU and fab business given that Intel don't think their fab is good enough to use and produce their CPU tile. I think they are starting to see the drawback of tripling down fab business, but may be too late to back down given the commitment and investment that they have put in.
    Reply
  • Reality_checker
    bit_user said:
    My condolences to all affected by this move. Unless the layoffs come from cancelled projects, it doesn't make much sense to me, since it seems to me that most of Intel's major problems have stemmed from execution failures:
    the 10 nm fiasco
    Sapphire Rapids' years of delay
    Ponte Vecchio's delay & yield problems
    Alchemist dGPU's delay and underperformance
    cancellation of Meteor Lake-S
    now this Raptor Lake degradation debacle
    I hoped Gelsinger would right the ship and get the problems sorted out that have been hampering Intel's ability to execute, but I think Wall St. is more of a "Mr Right Now" than "Mr Right", when it comes to Intel's long term best interests. With profits sagging, investors probably demanded something be done. Let's hope it doesn't come at too high a cost, long-term.

    I wonder if the biggest competitive advantage AMD has over Intel is merely the fact that they haven't paid out dividends. IMO, dividends attract the wrong kind of investor, when you have a high tech business that requires substantial reinvestment in R&D, with long lead times.

    Yes, it's executive mistakes... from before Pat become CEO.

    Things take time.
    Reply
  • ezst036
    Free money from the CHIPS act wasn't enough.
    Reply
  • bit_user
    watzupken said:
    I think they are starting to see the drawback of tripling down fab business, but may be too late to back down given the commitment and investment that they have put in.
    They have no choice. Fab costs are increasing too fast. Their own products will not be able to continue funding the needed fab developments. The only way to sustain their fab business is to open it to outside customers. Even spinning it off isn't an option, until they achieve a substantial revenue ramp.

    ezst036 said:
    Free money from the CHIPS act wasn't enough.
    It's not really free money. It's meant as an inducement to increase fab buildouts beyond what they'd have done without it. Also, unless you know otherwise, I think they probably have yet to actually receive any payouts.
    Reply
  • waltc3
    Intel's largest problem for many, many years has been upper management. They pulled Gelsinger out of retirement to head up the company because the board has no tech savvy--they looked at the numbers during Gelsinger's time, the Halcyon days of Intel of yore, back when Intel was "competing" by throwing money around to bankrupt its would-be competitors, subsidizing Dell to sell nothing but Intel products, refusing spare parts orders to companies making and selling AMD products, etc. But nobody will allow Intel to do that anymore. Those days are gone for good. I've advised Intel for years to spin off the CPU division and make it a separate company, and bad management continues to refuse to do that. Intel, year after year after year, was spending far more money for R&D than AMD, and here you can see their problem clearly. Gelsinger wants to throw more money into R&D because that's the way he did it way back when, when Gelsinger should know perfectly well that's not a productive strategy. AMD ran past Intel as if it was sitting still, on a fraction of the R&D expenditures @ Intel.

    The layoffs are needed, of course, but that won't be nearly enough. The company needs reorganization from top to bottom. The reason is a simple one. Intel is still very much organized as it was when it was a high-end x86 monopoly CPU supplier. They still throw a lot of money into idiot marketing as top management thinks people don't buy hardware, they buy dumb marketing, instead...;) The old guard at Intel simply knows next to nothing about how to create and run a very competitive tech company in today's savvy marketplace. The name of the game? Products. Period. If you don't have competitive products today, you lose. AMD has always understood that, and Lisa Su understands it better than anyone. "Build a better mousetrap, and they will come," has never been more true than it is today. I don't see Intel willing to make the necessary internal changes to become competitive again. I would think that at some point in the last nine years these things might've taken root in the company. It's too big, too cumbersome, too clumsy, and it needs to do more than one spin-off to become manageable again.
    Reply
  • bit_user
    waltc3 said:
    Intel, year after year after year, was spending far more money for R&D than AMD,
    They're not comparable. Intel has fabs, while AMD doesn't. To make them comparable, you should add together the R&D budget of both AMD and TSMC.

    Also, Intel traditionally played in more markets than AMD. So, that's another reason it's a mismatched comparison.

    waltc3 said:
    I've advised Intel for years to spin off the CPU division and make it a separate company
    Too bad they don't read the comments on these websites, eh?
    ; )
    I think spinning it off right now could be disastrous. The CPU division is carrying the rest of the company, just as Habana is trying to get its legs under it and their foundry business is trying to build a customer base. Even the CPU division faces some headwinds from alternative ISAs like ARM and RISC-V, leading to some uncertainty around how Intel will navigate that increased potential for competition.

    waltc3 said:
    I don't see Intel willing to make the necessary internal changes to become competitive again. I would think that at some point in the last nine years these things might've taken root in the company. It's too big, too cumbersome, too clumsy, and it needs to do more than one spin-off to become manageable again.
    They killed Optane, sold off the SSD business, spun out Altera, spun out MobilEye, and killed off lots of other products and projects. Before that, they got out of the datacenter networking business, not long before Nvidia went in the opposite direction. I think Gelsinger has done a lot to try and make the business leaner and more focused. I don't know how much more fat they can cut, before hitting muscle and bone.
    Reply
  • Silas Sanchez
    Intel were great back in the days of Pentium 4 and the first Dual cores and Quad cores, before the rise of imperialism.
    Going from my Pentium 4 3.8GHz to the first quad core 3GHz was incredible, they were like a super computer, never before had i seen such multitasking on a desktop pc. Crysis ran so well on the dual cores and quad cores while allowing music in the background, web browsing etc. Do that on an OCd P4 and the game frame rate was a stuttery mess.
    Sadly after that Intel went down hill making the same boring stuff over and over and was replaced by AMD, to this day it boggles my mind people actually buy Intel desktop cpus. Intel are anti consumer with their sockets-no future proofing at all like AMD. Just look at how bad they have gotten, the 14th gen was a tiny bit more perf over 13th but at the cost of alot more power draw. AMD are just smashing it.
    But i got to admit Intels mobile cpus are fantastic, how i can get 5hours of web browsing full brightness on my Thinkpad P72, ill never know.

    Times have changed, made in Taiwan and China is the future. Cheaper and better in a world where everything is now getting a 1year warranty. Mil-spec made in USA military flashlight? Yeah, 1 year warranty.
    Reply