Intel cuts 40% of workforce as data center unit faces new layoffs

Intel's workforce has shrunk by nearly 40% since 2022 as the chipmaker prepares to report second-quarter earnings amid a sweeping restructuring.

Intel Corp. told employees at its data center business unit that it will cut additional positions, extending a headcount reduction that has already eliminated about 51,000 jobs since 2022.

"This restructuring is part of our broader effort to become a more focused and efficient company," Intel said in a statement, adding that the changes are designed to ensure the right mix of roles and skills without affecting product commitments or technology roadmaps.

The company's global workforce has fallen to roughly 81,000 from about 132,000 four years ago, a decline of nearly 40 percent. In Oregon, where Intel remains the largest corporate employer, headcount dropped to about 16,000 from roughly 23,000 in 2024. The cuts come through a combination of business divestitures and direct layoffs.

Chief Executive Officer Lip-Bu Tan has made organizational efficiency a priority, arguing that Intel needs fewer management layers to accelerate decision-making and bring new technology to market faster. The restructuring comes as Intel's stock has surged more than 300 percent over the past year, from about $23 to roughly $99, as investors bet on a turnaround driven by artificial intelligence chip demand and the company's foundry expansion.

A Leaner Intel Takes Shape

The latest cuts target the data center and artificial intelligence group, a division that generated $5.1 billion in revenue in the first quarter, up 22 percent from a year earlier. The unit's growth reflects rising demand for Intel's microprocessors as AI systems handle more online tasks, though the company still trails Nvidia Corp. in the market for AI accelerators.

Intel's foundry business, which manufactures chips for external customers, represents another pillar of Tan's turnaround strategy. Apple Inc. and other large technology companies are expected to commission Intel for chip production, adding a new revenue stream to a business that has historically manufactured only its own designs. The foundry push puts Intel in direct competition with Taiwan Semiconductor Manufacturing Co., the dominant player in advanced chip fabrication.

Oregon's Semiconductor Industry Feels the Pinch

The sustained cuts have rippled through Oregon's chip sector, where employment has fallen to near 30-year lows. A recent report commissioned by Business Oregon, the state's economic development agency, warned that without stronger efforts to cultivate startups and build a more robust talent pipeline, the state's semiconductor industry risks becoming "insignificant" on the global stage.

Other Oregon technology companies have also undergone similar workforce reductions, compounding the impact on the local economy. Intel's downsizing in the state mirrors a broader trend across the semiconductor industry, where companies are balancing cost discipline with the need to invest in next-generation manufacturing capacity.

Intel shares trade at roughly 22 times forward earnings, a discount to Nvidia's 35 times and Advanced Micro Devices Inc.'s 30 times, reflecting the market's uncertainty about the company's ability to execute its turnaround. The layoffs could improve operating margins by reducing fixed costs, but they also raise questions about talent retention as Intel competes for engineers with Nvidia, AMD, and a wave of AI chip startups. The company is scheduled to report second-quarter results this week, with investors focused on data center revenue trends and foundry customer announcements.

This article is for informational purposes only and does not constitute investment advice.