Intel will lay off 15% to 20% of its factory workers, memo says

[BruceA]

Hopefully the people who leaked the internal memo are cut as well. It amazes me that in the span of two years Intel will have laid of more than 30% of the company. That is not good management.

30% is a crazy large number. I don’t feel like I have heard much beyond the people like what projects they are cutting or how they work differently.

Cutting people without an explicit communication of what they are doing around fabs, technology, designs, business units makes it really a mystery how this won’t put them in deeper execution hole than they currently are.

I get it they have too may people and maybe to deep a levels, so trimming with an explicit strategy and culture change is a must.

All I see is lots of top level talk but no real change of culture or how business is being done.

I think this whole fixing headcount against benchmarks will kill moral of the few motivated people left and I wonder if any really believe the leadership anymore.

 

[coldsolder215]

The 2024/2025 layoffs are deeper than the ACT layoffs in terms of percentage. Will the result be an even worse doom spiral?

That would be the definition of a doom spiral, good ol' positive feedback. Barring a miracle LBT will go scorched earth to satisfy near term financial obligations and I guess will be left with the GF model. It's just so much more Trumpian to just remind Taiwan that neocolonies should do as they're told, rather than attempt broader reindustrialization which the market hasn't asked for and doesn't need (and also has never been attempted in human history).

 

[osnium]

That would be the definition of a doom spiral, good ol' positive feedback. Barring a miracle LBT will go scorched earth to satisfy near term financial obligations and I guess will be left with the GF model. It's just so much more Trumpian to just remind Taiwan that neocolonies should do as they're told, rather than attempt broader reindustrialization which the market hasn't asked for and doesn't need (and also has never been attempted in human history).

I guess TSMC and Samsung will be the last two leading edge fabs standing until China develops indigenous EUV and SMIC comes roaring back.

 

[count]

Sounds like some McKinsey consultants went to Intel and told the board/CEO "Hey TSMC has 30% fewer foundry employee's than you do per unit of production"

Intel board/CEO says "How can we be competitive if TSMC can operate with 30% fewer employees, we need to do layoffs"

Intel does some internal analysis, talks to some directors and upper managers and realizes they can't fire 30% of foundry employees without wheels coming off and settles on 15-20%.

This is how decisions at F500 companies get made, and how they get into corporate death spirals.

The truth is Intel will never be competitive with TSMC no matter how many people they fire, because they operate in a completely different culture. Layoffs will only add to Intel's culture challenges.

 

[siliconbruh999]

And McKinsey got a good check for destroying future but we need clarity though on exactly what's being cut the cut under pat was brutal I saw many talent leave or retire.

 

[MKWVentures]

if you wanna look at bad management: Kranzich

Hiring 10K+ people when you are losing share and already bloated.... then focusing on foundry instead of AI execution.... then losing 25% of your revenue... Then having stock below book value and a problematic balance sheet ..... PG is on the mount Rushmore of failed CEOs....

Who are the contenders for destroying this much shareholder value?

 

[MKWVentures]

The truth is Intel will never be competitive with TSMC no matter how many people they fire, because they operate in a completely different culture. Layoffs will only add to Intel's culture challenges.

you are probably correct. .... if only some previous CEO had decided to not invest in Fab technology and instead sign agreements with TSMC.

 

[benb]

I'm watching this website for objective news (ie numbers). https://www.warntracker.com/company/intel

Some surprises on this website: As coldsoldier indicated the last big layoff affecting OR and AZ (ie the fabs) was in 2016.

PG protected the fabs, judging from this website: In 2024 there were no WARN Act cuts in OR or AZ, most cuts were in CA (no fabs).

LBT appears to be gutting the fabs (ie OR, AZ), and protecting the designers, in contrast to PG, based on the news report in the Oregonian. I would wait to see how this plays out (watch what they do not what they say). But if it evolves as the Oregonian indicates this sets up fab-lite (ie using TSMC and Samsung more rather than Intel internal mfg).

 

[MKWVentures]

I'm watching this website for objective news (ie numbers). https://www.warntracker.com/company/intel

Some surprises on this website: As coldsoldier indicated the last big layoff affecting OR and AZ (ie the fabs) was in 2016.

PG protected the fabs, judging from this website: In 2024 there were no WARN Act cuts in OR or AZ, most cuts were in CA (no fabs).

LBT appears to be gutting the fabs (ie OR, AZ), and protecting the designers, in contrast to PG, based on the news report in the Oregonian. I would wait to see how this plays out (watch what they do not what they say). But if it evolves as the Oregonian indicates this sets up fab-lite (ie using TSMC and Samsung more rather than Intel internal mfg).

Pat had lots of voluntary retirement and all groups were open to this.... there are people who took the package and had a job at a new company the next day. This is not the case with LBT. groups need to decide which job and who to eliminate so that the correct changes are made for Intel. This will be much more unpleasant for employees.

 

[count]

LBT is making the same the same fundamental mistake as BK and PG by committing to the losing IDM business model. PG was a great leader with a bad strategy. People here seem to think LBT is going to be a better leader but he’s still got a bad strategy. Can you even consider someone a good leader if they pursue a failing strategy?

 

[osnium]

I'm watching this website for objective news (ie numbers). https://www.warntracker.com/company/intel

Some surprises on this website: As coldsoldier indicated the last big layoff affecting OR and AZ (ie the fabs) was in 2016.

PG protected the fabs, judging from this website: In 2024 there were no WARN Act cuts in OR or AZ, most cuts were in CA (no fabs).

LBT appears to be gutting the fabs (ie OR, AZ), and protecting the designers, in contrast to PG, based on the news report in the Oregonian. I would wait to see how this plays out (watch what they do not what they say). But if it evolves as the Oregonian indicates this sets up fab-lite (ie using TSMC and Samsung more rather than Intel internal mfg).

So eventually does this mean a fab spinoff or just a shutdown?

 

[XYang2023]

LBT is making the same the same fundamental mistake as BK and PG by committing to the losing IDM business model. PG was a great leader with a bad strategy. People here seem to think LBT is going to be a better leader but he’s still got a bad strategy. Can you even consider someone a good leader if they pursue a failing strategy?

A great leader and a bad strategy don’t go hand in hand. At the time, Pat Gelsinger had just decided to go all-in on the foundry strategy. I left a message on his Twitter, suggesting that instead of focusing on concrete trucks, he should prioritize AI to compete with Nvidia. I also recommended consolidating all AI-related efforts—AXG, Mobileye, and Gaudi—under a single team. I'm sure others had similar thoughts.


His response was that IDM 2.0 was the chosen strategy, dismissing any criticism of that direction.


He also blamed the previous CEO for missing opportunities in mobile and foundry. Yet under his own leadership, Intel not only missed the AI wave but also entered a period of significant financial stress. How can that be considered good leadership?


What Lip-Bu is doing now is correcting those mistakes while maximizing value. Maximising value does not mean shutting down fabs. It literally means maximising the discounted cashflows.

 

[Artificer60]

What Lip-Bu is doing now is correcting those mistakes while maximizing value. Maximising value does not mean shutting down fabs. It literally means maximising the discounted cashflows.

Say what you will, it is my personal opinion that Lip-But Tan is currently failing one of the key aspects of leadership. If you don't think Intel employees are stressed out and uncertain of the future then you don't know anyone that works at Intel. He has failed to give employees a vision that they can believe in. Does he have a plan and a vision? I'm sure he does. Based on his past success I'm hopeful that he will be able to pull it off. But he has done nothing to instill this vision to the rank and file. Perhaps he has communicated his vision clearly to upper management, but they aren't the ones that will make or break the company. That will come from having employees that understand the vision and are committed to it.

That isn't to say he has to spend all his time talking to employees or send out weekly cheer leading videos, but he needs to do more than give his employees the silent treatment. You are free to feel that employees should spend their free time cruising the internet looking for reasons to believe in their company, but I respectfully disagree.

 

[Artificer60]

LBT is making the same the same fundamental mistake as BK and PG by committing to the losing IDM business model. PG was a great leader with a bad strategy. People here seem to think LBT is going to be a better leader but he’s still got a bad strategy. Can you even consider someone a good leader if they pursue a failing strategy?

Krzanich committing to IDM? He stopped investing in fabs and let TD flounder under a leader who couldn't deliver on 10nm while making up new criteria to lay people off. Though he did manage to position himself as a key player in an amazingly weak reality TV show. So there is that.

 

[XYang2023]

Say what you will, it is my personal opinion that Lip-But Tan is currently failing one of the key aspects of leadership. If you don't think Intel employees are stressed out and uncertain of the future then you don't know anyone that works at Intel. He has failed to give employees a vision that they can believe in. Does he have a plan and a vision? I'm sure he does. Based on his past success I'm hopeful that he will be able to pull it off. But he has done nothing to instill this vision to the rank and file. Perhaps he has communicated his vision clearly to upper management, but they aren't the ones that will make or break the company. That will come from having employees that understand the vision and are committed to it.

That isn't to say he has to spend all his time talking to employees or send out weekly cheer leading videos, but he needs to do more than give his employees the silent treatment. You are free to feel that employees should spend their free time cruising the internet looking for reasons to believe in their company, but I respectfully disagree.

Everyone is stressed out, including shareholders.

Intel needs to change its culture. There is no way around it. AMD has 28000 employees. TSM has around 70k employees. It does not make sense for Intel to have 108k employees.

Intel should right size to around 70k employees.

 

[Artificer60]

I'm watching this website for objective news (ie numbers). https://www.warntracker.com/company/intel

Some surprises on this website: As coldsoldier indicated the last big layoff affecting OR and AZ (ie the fabs) was in 2016.

PG protected the fabs, judging from this website: In 2024 there were no WARN Act cuts in OR or AZ, most cuts were in CA (no fabs).

LBT appears to be gutting the fabs (ie OR, AZ), and protecting the designers, in contrast to PG, based on the news report in the Oregonian. I would wait to see how this plays out (watch what they do not what they say). But if it evolves as the Oregonian indicates this sets up fab-lite (ie using TSMC and Samsung more rather than Intel internal mfg).

WARN notices aren't necessarily a good indicator. According to the hive mind of the internet "a company can offer severance pay in lieu of providing the full 60-day notice required by the WARN Act for mass layoffs or plant closings. This is often referred to as "pay in lieu of notice". However, the severance package must meet certain criteria to be considered a valid alternative to WARN notice."

 

[XYang2023]

https://twitter.com/x/status/1934754459994980408

 

[Artificer60]

Everyone is stressed out, including shareholders.

Intel needs to change its culture. There is no way around it. AMD has 28000 employees. TSM has around 70k employees. It does not make sense for Intel to have 108k employees.

Intel should right size to around 70k employees.

I don't think I said Intel didn't need to reduce headcount. However Lip-Bu Tan needs to give the employees that remain a reason to believe. I've seen what happens when a company doesn't do that. The employees will stick around in a bad job market, but they become less committed and are actively looking for an opportunity to be elsewhere.

 

[benb]

So eventually does this mean a fab spinoff or just a shutdown?

Three scenarios. LBT may gut the fabs as a threat and Trump may deliver more money, enough to keep Intel going. Or LBT may cede control to an acquirer, possibly with a Trump golden share (Ala Nippon Steel deal with US Steel). Or LBT may just execute a classic fab lite strategy where Intel stops developing advanced nodes, operates 18A for a few years, and TSMC gets a major new customer. These are dramatic but realistic options.

In a more optimistic but far-fetched scenario, LBT declares Intel as the main and only customer for 18A and says that's enough to carry on developing new nodes, and manages to develop 14A at a cost of $100B, rather than outsourcing it to TSMC for half of that due to the economies of scale TSMC has. And the board signs off on that because they love the USA and hate making money.

 

[XYang2023]

I don't think I said Intel didn't need to reduce headcount. However Lip-Bu Tan needs to give the employees that remain a reason to believe. I've seen what happens when a company doesn't do that. The employees will stick around in a bad job market, but they become less committed and are actively looking for an opportunity to be elsewhere.

I think he will do that after announcing the layoffs.

They also need to layout AI strategy to outsiders. For example, given Lip-Bu is an investor of perplexity.ai, Intel could form partnership with perplexity.ai to develop targeted solutions. Or doing something similar. They could also acquire AI start-up teams.