Intel Layoffs Worse than Expected

Intel has begun a new round of layoffs, with over 5,000 employees losing their jobs across four U.S. states. The cuts are deeper than expected, with almost 2,000 losses in California, about 2400 in Oregon, and smaller cuts in Arizona and Texas.

The cuts seem to mirror a similar action taken recently by Microsoft, though the reasons for the layoffs are different: Where Microsoft is flying high, Intel is circling the drain.

“We are taking steps to become a leaner, faster and more efficient company,” Intel told employees via email. “Removing organizational complexity and empowering our engineers will enable us to better serve the needs of our customers and strengthen our execution.”

Intel has struggled over the past decade thanks to the rise of mobile devices, cloud computing, and its inability to ramp up new manufacturing processes on schedule. Former CEO Pat Gelsinger orchestrated a turnaround strategy centered on modernizing Intel’s manufacturing capabilities to better take on TSMC, but this was expensive and risky, and Gelsinger was forced out of the company last December. His replacement, Lip-Bu Tan, has engaged in “simple math” to try to right the Intel ship through deep cost-cutting, which includes layoffs.

Intel is also cutting non-core businesses. Earlier this week, it sold over half of its Mobileye holdings, and last month, it decided to “wind down” its automotive chipmaking businesses.

Mr. Tan had warned employees of the cuts a month ago, telling them that Intel was no longer a leading semiconductor firm and that it needed to be smaller and more agile, like AMD, Broadcom, and Nvidia.

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