Intel Faces Stormy Forecast with Job Cuts Amid CEO's Revitalization Efforts

Amidst efforts to rejuvenate the company under newly appointed CEO Lip-Bu Tan, Intel has issued a weak forecast for the second quarter and announced plans to cut jobs as part of a cost-reduction initiative. This cautious outlook, well below analysts' expectations of $129 billion, caused Intel shares to drop more than 6% in after-hours trading.

In its statement on Thursday, Intel projected second-quarter revenue between $11.2 billion and $12.4 billion. The company emphasized a need to revitalize its corporate culture, which it sees as currently hindered by bureaucracy, with restructuring plans including management layer reductions aimed at accelerating decision-making.

The cost-cutting measures are designed to align operational expenses with the company's reduced scale, targeting a decrease in annual operating costs to about $17 billion this year, and further down to $16 billion by 2026. Reports indicate that Intel plans to reduce its workforce by over 20%, although the company has not yet provided a specific estimate for the one-time expenses related to this downsizing.

Despite the tepid outlook, Intel exceeded expectations with first-quarter revenue totaling $12.7 billion, positioning it as another semiconductor company outperforming market predictions. However, the gain is suspected to be influenced by customers ordering ahead of potential tariff impositions.

Intel's CFO, David Zinsner, highlighted the uncertain macroeconomic environment impacting their forecast. He explained that the company adopts a cautious approach to maintain investment in core products and foundry services while maximizing operational cost savings and capital efficiency.

CEO Lip-Bu Tan, in his first earnings report since taking charge, announced that the company will enhance operational efficiency and empower engineers to create superior products by simplifying management structures. This move is intended to foster a more innovative culture, directly addressing inefficiencies caused by the complexity of existing organizational processes.

Intel's decline in the semiconductor sector is evident; it has lost ground against competitors such as TSMC in chip manufacturing technology and Nvidia in AI computing power. With the market under pressure, Intel's shares have risen about 7.2% in 2025, outperforming the Philadelphia Semiconductor Index which fell nearly 16% during the same period.

Zinsner cautioned that the second quarter might reflect weakened performance due to the pull-ahead of orders in anticipation of tariffs. Looking forward, Intel is concerned about potential slowdowns in consumer spending and data center investments amidst rising trade uncertainties, resulting in a widened range in their financial forecasts.

To bolster its financial position, Intel plans to cut $2 billion from its new plants and equipment spending as it redirects focus toward key areas and divests businesses that do not align with its core strategies. This latest round of layoffs follows a previous reduction of around 15,000 jobs last year, as Intel aims to streamline operations.