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Intel is making significant changes to its operations in response to President Donald Trump’s trade war with China. The US chipmaker plans to reduce its capital expenditures and eliminate managers as part of a turnaround strategy under its new chief executive.
The company, which previously cut 15,000 jobs in the second half of 2024, announced on Thursday that it would be streamlining its organization, eliminating management layers, and enabling faster decision-making. These changes come as Intel faces challenges in the semiconductor industry due to the Trump administration’s tariff plans.
Despite these efforts, Intel provided a more cautious outlook for the current quarter, with adjusted revenue expected to be between $11.2bn and $12.4bn, lower than analyst expectations of $12.9bn. This news caused Intel’s shares to drop more than 5% in after-hours trading.
The latest round of cuts follows a period of financial difficulties for Intel, as it has struggled to keep up with competitors like Taiwan’s TSMC in manufacturing cutting-edge semiconductors. The company has also faced challenges in capturing market share in areas like AI data center chips, where Nvidia has been dominant.
Investors have expressed optimism about the new leadership at Intel, with CEO Lip-Bu Tan promising cultural change and a new strategic direction for the company. Tan has acknowledged the need for critical changes to reduce unnecessary bureaucracy and improve engineering efforts.
In an email to Intel employees, Tan announced that workforce reductions would begin during the current quarter and continue over the coming months. The company also plans to enforce a return-to-work policy, requiring employees to be on-site four days a week by September 1.
Intel has revised its operational expenses targets for 2025, reducing them from $17.5bn to $17bn, and cutting $2bn from its capital expenditure target of $20bn. The company is not including restructuring charges in its guidance for the year.
In the first quarter of 2025, Intel reported flat adjusted revenue of $12.7bn, with a widened net loss of $821mn. Despite these challenges, the company remains optimistic about its future prospects.
The semiconductor industry continues to face uncertainty due to the ongoing trade tensions between the US and China. Washington’s national security review of semiconductor products could lead to further tariffs and disruptions in the global supply chain.
Overall, Intel is taking proactive steps to address the challenges it faces and position itself for success in the evolving semiconductor market. With new leadership and a renewed focus on innovation, the company is working towards a brighter future in the industry.
