Intel to begin factory layoffs mid-July in first major move under new CEO Lip-Bu Tan

Intel has informed its factory workforce that it will begin implementing layoffs starting in mid-July, with the initial phase expected to conclude by the end of that month. The move marks the first significant action under new CEO Lip-Bu Tan, who took over in March amid continued financial pressure and industry upheaval.

In an internal memo reviewed by The Oregonian/OregonLive, Intel executives acknowledged the difficulty of the decision, writing: “We have been taking action to build a leaner and more agile engineering- and technician-driven Intel Foundry that is poised to build customer trust.” Intel Foundry is the company’s in-house manufacturing arm. “These decisions are extremely difficult,” the memo continued, “but they are necessary to help Intel achieve a more competitive market position and to put our company on a solid footing for the future.”

Although the memo did not specify how many factory positions would be affected or in which areas, employees in other departments indicated they are operating on a similar timeline. According to unnamed sources within Intel, business units have been granted some flexibility to implement the layoffs in their own way, provided they meet financial targets set by senior leadership.

Intel, which declined to offer details on the layoff plans, said in a public statement on Thursday: “Removing organisational complexity and empowering our engineers will enable us to better serve the needs of our customers and strengthen our execution. We are making these decisions based on careful consideration of what’s needed to position our business for the future, and we will treat people with care and respect as we complete this important work.”

The job cuts are part of a wider effort to reinvent Intel as it faces an increasingly hostile market environment. The company is contending with shrinking sales, intensifying global competition in chip manufacturing, a slump in the PC and laptop sector, and a shift in industry focus towards artificial intelligence — an area where Intel is widely seen as falling behind. Analysts have noted the company lacks competitive AI-focused products, especially compared to rivals such as Nvidia and AMD.

Intel’s recent challenges are not new. Under former CEO Pat Gelsinger, the company cut 15,000 jobs in 2023 — the largest workforce reduction in its history — including 3,000 positions in Oregon alone. The company remains Oregon’s largest private employer, with approximately 20,000 employees in Washington County.

Workers across Intel’s Oregon facilities have been anxiously awaiting updates on potential layoffs since April, when Lip-Bu Tan signalled job cuts during a call with investors. At the time, Tan stated that it was “a little bit too soon” to outline his broader strategic vision for the company. Since then, employees have voiced concern both privately and in online forums, expressing frustration over the lack of communication from the executive suite.

Tan’s approach so far has contrasted with that of his predecessor, who often communicated company strategy more publicly. However, Tan is expected to present a more detailed plan for Intel’s transformation later this year. His leadership will likely focus on reasserting Intel’s relevance in next-generation computing, regaining market share in semiconductor manufacturing, and restoring investor confidence.

The looming layoffs underscore Intel’s commitment to overhauling its business model in an era where speed, agility, and innovation are increasingly critical. Whether the changes will be sufficient to revive the company’s fortunes remains to be seen.