Intel CEO Lip Bu-Tan unveiled extensive changes today aimed at transforming the tech giant, including workforce reductions, restructuring efforts, and stricter return-to-office requirements. The announcement coincided with Intel's Q1 earnings report, triggering a 5% decline in the company's stock price.
Just five weeks into his role as CEO, Tan outlined plans to streamline operations by eliminating excess management layers and non-core products. He highlighted concerns about bureaucratic barriers hampering innovation, noting that some teams operate with "eight or more layers deep" of management.
While specific numbers weren't disclosed, layoffs will begin in Q2 and continue over several months. Industry speculation suggests up to 20% of Intel's workforce could be affected, potentially impacting nearly 20,000 employees. This follows a previous round of cuts in August 2024 that reduced staff by 15%.
The restructuring includes ambitious cost-reduction targets, with Intel planning to decrease operating expenses by $1.5 billion over two years. The company aims to lower expenses to $17 billion in 2025 and $16 billion in 2026.
A key component of the transformation involves changing management evaluation metrics. Rather than measuring success by team size, the new approach emphasizes engineering excellence and operational efficiency.
The workplace policy is also changing, with employees required to be on-site four days per week starting September 1, up from the current three-day requirement. Additional measures include reducing administrative tasks, cutting unnecessary meetings, and making certain reporting requirements optional.
Tan acknowledged the challenges ahead while expressing confidence in the company's potential for reinvention. "It's going to be hard. It will require painful decisions," he stated, emphasizing the goal of building "a new Intel for the future."
The restructuring marks a decisive shift in Intel's direction under new leadership, as the company works to streamline operations and enhance competitiveness in the evolving tech landscape.