Chip giant Intel is reportedly gearing up to reduce its global workforce by about 20% next month.
This reduction, which translates to around 10,000 jobs, has been confirmed by multiple Intel employees speaking to a news outlet. Intel’s manufacturing vice president, Naga Chandrasekaran, mentioned in a memo sent to staff that “these are difficult actions, but they are necessary to address our financial challenges.” He noted that the decision brings discomfort for everyone involved.
The layoffs are anticipated to commence in a few weeks, primarily affecting Intel Foundry, the division dedicated to producing semiconductors for other companies.
This unit encompasses a diverse array of roles, including factory engineers and those focused on designing future chip technologies.
Last year, Intel received a substantial federal grant of $7.9 billion aimed at bolstering U.S.-based semiconductor manufacturing through the CHIPS Act. However, only $2.2 billion of that amount was dispensed before facing budget freezes under the newly elected administration.
The upcoming job cuts come amidst delays in developing high-end chips for AI, along with previous layoffs of 15,000 employees across global operations last year, which have been triggered by a slump in PC and server demands.
Moreover, Intel has postponed the opening of its $10 billion facility in Ohio until 2030, citing insufficient demand as a reason.
Intel’s stock has seen a nearly 30% drop over the past year, trading around $21.50 earlier this week.
In March, CEO Pat Gelsinger was ousted, and semiconductor veteran Lip-Bu Tan stepped in as the new leader. One observer remarked that while tariffs might influence the layoffs, the primary factor is Intel’s financial struggles linked to declining revenues.
Intel had initially signaled plans to cut jobs back in April but hadn’t revealed the extent of these layoffs until now.
Chandrasekaran clarified that these cuts were not about voluntary departures. Instead, Intel is focusing on performance evaluations, strategic considerations, and necessary operational adjustments. He wrote, “These reductions result from a blend of portfolio changes, position eliminations, and difficult investment choices.” He also emphasized the need to evaluate factory impacts.
Oregon’s workforce may take a significant hit since Intel is the state’s largest private employer, with 20,000 employees. The company operates major manufacturing facilities not just in Oregon but also in Arizona, New Mexico, Israel, Ireland, and Malaysia.
The state of Oregon has provided Intel with a $115 million incentive, which could be retracted if Intel fails to meet job creation or tax revenue targets related to the expansion of the D1X facility in Hillsboro.
While Intel refrained from commenting specifically about Chandrasekaran’s memo, the company emphasized its commitment to handling transitions with care and respect.
Intel hasn’t disclosed the exact count of employees in manufacturing roles, but industry analysts suggest that factory-based workers could comprise about 25% to 35% of Intel’s total workforce of 109,000. While Intel’s largest manufacturing site is in Oregon, it employs around 20,000 people, not all of whom are involved in actual production.
