On July 25, Intel CEO Lip-Bu Tan announced a sweeping restructuring plan that includes laying off 15% of the company's workforce, reducing headcount from around 96,000 at the end of June to approximately 75,000 by year-end. This equates to roughly 21,000 job cuts, or over 25% of Intel's global staff. In an internal memo, Tan revealed that management layers had already been reduced by 50% during significant Q2 cuts, and further changes will follow as Intel implements a return-to-office policy starting in September.

Tan outlined three strategic priorities for Intel moving forward: transforming into a financially disciplined foundry, revitalizing its x86 ecosystem, and refining its AI roadmap. As part of this shift, Intel is canceling chip fabrication projects in Germany and Poland, and requiring all major chip designs to be reviewed and approved by Tan personally before tape-out.

The restructuring coincides with the release of Intel's Q2 2025 results. Revenue reached $12.9 billion—slightly above expectations—but the company still posted a $2.9 billion loss. Wall Street analysts have pushed for a clearer path to profitability, and Tan's aggressive cost-cutting appears to be in direct response.

Intel's manufacturing strategy is also undergoing major changes. Tan criticized past foundry investments as premature and poorly aligned with market demand, leading to underutilized and scattered capacity. The company will now scale capacity more cautiously based on confirmed customer demand. Intel has halted fab construction in Germany and Poland, consolidated Costa Rica operations into Vietnam and Malaysia, and slowed the pace of its Ohio fab build-out. Internally, Intel is placing stricter controls on R&D investment and will only proceed with Intel 14A node development if backed by customer commitments.

Tan confirmed Intel will continue to invest in its Intel 18A node, aiming to gradually increase volume with internal products and select U.S. government contracts to attract more external customers. However, the company has acknowledged it may exit the foundry business entirely if 14A fails to secure significant external demand.

In the client computing space, Intel's Panther Lake CPU—its first 18A-based chip—is set to debut later this year. Development of Nova Lake will continue to close performance gaps in high-end desktops. On the data center front, Intel will reintroduce Simultaneous Multithreading (SMT) to improve competitiveness and plans to announce a new data center leader this quarter. All next-gen products will now be designed under the principles of architectural simplicity, optimized cost, and reduced SKU complexity.

For AI, Tan admitted that Intel had previously focused too narrowly on training chips. Going forward, the company will take a holistic approach—aligning chips, systems, and software to meet emerging workloads like inference and AI agents. Reverse-engineering software and hardware requirements from next-gen use cases will drive Intel's differentiated strategy.

This marks one of the largest layoffs in Intel's history. Compared to its headcount of nearly 99,500 in late 2023, the announced cuts represent about 25% of its workforce. Observers expect the hardest-hit regions to include those involved in underperforming investments—such as Germany, Poland, and Costa Rica.

Despite reporting another quarterly loss, Intel's stock has risen more than 8% year-to-date, reflecting cautious investor optimism around Tan's turnaround strategy. At its core, the restructuring is about restoring Intel's competitiveness, trimming inefficiencies, and building long-term shareholder value—even if it means letting go of unprofitable projects and reshaping Intel's manufacturing ambitions.

As Intel works to regain its footing in the era of AI, Tan's memo leaves little doubt: the company is undergoing one of its most aggressive—and painful—transformations in decades.