Intel announces a drastic decision to fix its struggling business | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Over the past few months, Intel (INTC) has doubled down on fixing a grim reality surrounding its business. The company has fallen behind its competitors, such as Nvidia, IBM, and Samsung, due to its failure to innovate its chip manufacturing processes.

Earlier this month, Intel CEO Lip-Bu Tan even told employees during a conversation broadcast that the company is no longer a leader in its industry.

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“Twenty, 30 years ago, we are really the leader,” said Tan. “Now I think the world has changed. We are not in the top 10 semiconductor companies.”

During the second quarter of this year, that reality has become more apparent. In Intel’s latest earnings report, the company revealed that its revenue remained flat year-over-year during the quarter. Also, Intel suffered a net income loss of $2.9 billion, which is higher than the $1.6 billion loss it faced during the same quarter last year.

In the report, Tan said the company will double down on its efforts to outperform its competitors and become more profitable.

“We are laser-focused on strengthening our core product portfolio and our AI roadmap to better serve customers,” said Tan. “We are also taking the actions needed to build a more financially disciplined foundry.”

Intel plans to reduce its workforce by the end of the year.

Image source&colon; picture alliance/Getty Images

Intel has more bad news for employees

One of these actions to cut costs includes Intel laying off employees, an effort that has been ramping up for the past few months.

During an earnings call on July 24, Tan confirmed that the company plans to end the year with a headcount of only 75,000 workers.

“During Q2, we completed the majority of the actions needed to achieve our year-end target of 75,000 employees,” said Tan. “These were hard but necessary decisions, and we reduced management layers by approximately 50% in the process.”

Intel confirmed it is looking to reduce its workforce by another 15% by the end of the year, shedding about 25,000 jobs.

“Over the last three months, I have completed a systematic review of every organization and function reporting to the CEO,” said Tan. “These reviews included detailed analysis of headcount, skill sets, spending, site distribution, executive population, and restructuring plans.

“We have much work to do in building a clean and streamlined organization, which we have started in earnest and have remained an area of focus for me during Q3. Our goal is to reduce inefficiencies and redundancies and increase accountability at every level of the company.”

In addition, Tan confirmed that the company’s return to office mandate, which will require employees to work from the office four days a week, will go into effect in the next few months.

“We are on track to implement our return to office mandate, starting [in] September,” said Tan. “These actions are necessary not just to reduce our operating expenses, but to make the company more agile, collaborative, and vibrant to simplify our business and improve our product and process execution.”

Tan first warned employees of the new return-to-office mandate earlier this year, claiming during an earnings call in March that “the power of teamwork” is essential to “reinstill a more collaborative working environment, improving efficiency, and boosting innovation.”

Intel recently increased layoff efforts in certain areas

Intel’s increased focus on restructuring its workforce comes after it announced in April that it will reduce its operating expense target to $17 billion in 2025 and $16 billion in 2026. Job cuts will play a vital role in achieving those goals.

Just last month, Intel notified 10,000 factory workers that they will be laid off from their jobs. It later announced that its automotive business will soon be discontinued, resulting in even more layoffs.

More Labor:

According to recent WARN notices, Intel also increased its planned layoffs in Arizona, California, Oregon, and Texas. The latest round of layoffs means Intel has cut over 20,000 jobs, a year after it announced that it would reduce headcount by over 16,000 in August last year.

Intel isn’t the only tech giant that is dramatically restructuring its workforce. Amazon, Meta, and Microsoft have also conducted significant layoffs this year.

According to recent data from Layoffs.fyi, about 169 tech companies have reduced their workforces this year, resulting in over 80,000 employees losing their jobs.