To: All Employees
Subject: Steps in the Right Direction
From: LBT
Date/Time: July 24, 2025 at 1:01 pm PT
Team,
This afternoon, we reported our Q2 2025 results. We delivered revenue above the high end of our guidance, reflecting solid demand and execution across the business. I want to thank you all for the work you are doing to move the business forward.
I know the past few months have not been easy. We are making hard but necessary decisions to streamline the organization, drive greater efficiency and increase accountability at every level of the company. These actions are critical to strengthening our competitive position going forward, but it means we are saying goodbye to valued colleagues. To everyone who will be leaving Intel: Thank you, sincerely, for your contributions.
We are implementing a plan to reduce our headcount by approximately 15%, and we plan to end the year with a global workforce of about 75,000 employees as a result of workforce reductions and attrition. We completed a significant amount of our workforce reductions in Q2, streamlining the number of management layers by about 50% in the process. We are also on track to implement our return-to-office policy in September, with sites completing necessary improvements to operate at full capacity.
All of this is designed to drive organizational effectiveness and transform our culture. We will become a faster, more agile and more vibrant company. We will eliminate bureaucracy and empower engineers to innovate with greater speed and focus. And we will reduce our costs to enable investments in future growth. These are the building blocks of a new Intel – and we took important steps in the right direction in Q2.
Strategic Pillars of Growth
The next step is uniting behind a clear strategy to regain market share and drive profitable long-term growth. I have taken a holistic view of the business and identified three critical areas of focus:
1. Become a More Financially Disciplined Foundry
We will take a fundamentally different approach to building our foundry business. Over the past several years, the company invested too much, too soon – without adequate demand. In the process, our factory footprint became needlessly fragmented and underutilized. We must correct our course.
Going forward, we will follow a systematic approach to growing our factory footprint that’s fully aligned with the needs of our customers. We will be judicious and disciplined as we allocate capital – because that’s what great foundries do.
With that in mind, we have decided not to move forward with previously planned projects in Germany and Poland. We also plan to consolidate our assembly and test operations in Costa Rica to our larger sites in Vietnam and Malaysia. Costa Rica remains a large and important Intel site that’s home to key engineering teams and corporate functions.
We remain deeply committed to investing in the U.S., where we will apply the same level of financial discipline. To that end, we are further slowing construction in Ohio to ensure our spending is aligned with demand – while maintaining flexibility to accelerate based on new customer wins.
We are also sharpening the focus and financial discipline of our technology development investments. Job number one is ramping Intel 18A at scale. Intel 18A and Intel 18A-P are critical nodes for Intel Products and will drive meaningful wafer volumes well into the next decade – starting with Panther Lake later this year. As we ramp our own products in high volume and deliver for important Intel 18A customers like the U.S. government, we will be in a better position to attract external customers to this technology.
Looking further ahead, we’re developing Intel 14A as a foundry node from the ground up in close partnership with large external customers. This is essential to designing a process that meets specific customer requirements and enables us to address a broader segment of the market. Going forward, our investment in Intel 14A will be based on confirmed customer commitments. There are no more blank checks. Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution.
2. Revitalize the Intel x86 Ecosystem
We will focus on growing share in our core client and server segments. To that end, I am working closely with our product and engineering teams to strengthen our roadmap.
In client, Panther Lake is our top priority as it will reinforce our strength in notebooks across consumer and enterprise. We also must drive continued progress on Nova Lake to close gaps in the high-end desktop space.
In data center, we are focused on regaining share as we ramp Granite Rapids while also improving our capabilities for hyperscale workloads. To support this, we are reintroducing simultaneous multi-threading (SMT). Moving away from SMT put us at a competitive disadvantage. Bringing it back will help us close performance gaps. We are also making good progress in our search for a new leader of our data center business, and I plan to share more on that this quarter.
Across client and data center, I’ve directed our teams to define next-generation product families with clean and simple architectures, better cost structures and simplified SKU stacks. In addition, I have instituted a policy where every major chip design is reviewed and approved by me before tape-out. This discipline will improve our execution and reduce development costs.
3. Refine our AI Strategy
We will focus our AI efforts on developing a cohesive silicon, system and software stack strategy. In the past, we have approached AI with a traditional, silicon- and training-centric mindset. This needs to change – and we have already started incubating new capabilities while attracting new talent.
As we make this shift, we will concentrate our efforts on areas we can disrupt and differentiate, like inference and agentic AI. Our starting point will be emerging AI workloads – then we will work backward to design software, systems and silicon that enable the best customer outcomes. We have a lot of work underway, and will be sharing more about our plans in the coming months.
Owning Our Future
The future of Intel is ours to build, but we have no time to waste. We must continue acting with urgency, discipline and focus in everything we do.
Q2 was the first step in the right direction, and our operational results give me confidence we have what it takes to win. We will meet this moment – by building a new Intel for a new era.
Thank you again for your commitment and hard work. I look forward to talking with you later today.
Lip-Bu
www.intc.com
