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Lip-Bu Tan, recently appointed CEO of Intel, delivered a clear message to employees emphasizing the necessity for organizational changes aimed at enhancing efficiency. Although he indicated that reductions in the workforce are on the horizon, no specific number of layoffs was communicated in his address.
According to reports from Bloomberg, Intel is considering a potential workforce decrease of up to 20%, which translates to approximately 21,780 positions based on a total of about 108,900 employees at the end of 2024. While Tan’s announcement suggests significant changes may take effect as early as the second quarter, the precise scale of job cuts remains unspecified.
In conjunction with the release of Intel’s first-quarter earnings for 2025, Tan remarked on the company’s financial performance, expressing that their results were “a step in the right direction” due to revenues, gross margin, and earnings per share exceeding forecasts. He acknowledged the leadership of former interim co-CEOs Dave Zinsner and Michelle Johnston while emphasizing the need for continuous improvement.
However, Tan cautioned that progress would not come without challenges. He noted the volatile macroeconomic environment contributing to a cautious outlook for the second quarter and highlighted various areas requiring improvement. “We must confront our challenges head-on and take swift actions to get back on track,” he warned.
He acknowledged that necessary changes would inevitably lead to a reduced workforce, underscoring the difficult decisions ahead as Intel aims to secure its future. Nonetheless, he clarified that no specific headcount reduction target had been established.
Instead, he set a new non-GAAP operating expense goal for Intel of approximately $17 billion in 2025, down from a previously stated target of $17.5 billion, with a further reduction to $16 billion anticipated in 2026. Tan reiterated the urgency of implementing these changes starting in the second quarter, with plans to act swiftly in the months ahead.
Tan’s Perspective on Intel’s Culture
Tan has taken on the challenge of steering Intel through a turbulent period marked by intense competition, particularly from Nvidia in the AI and graphics domains, as well as from Advanced Micro Devices in the x86 processor market. He was forthright in his assessment of Intel’s corporate culture, labeling it as “too slow, too complex, and too set in our ways,” and emphasized the necessity for change.
To tackle these issues, Tan introduced a “flatter Executive Team (ET) structure” as a step toward improving efficiency and fostering faster decision-making. He highlighted the need for simplicity, agility, and collaboration throughout the organization and expressed intentions to revamp the company’s AI strategy and reduce capital expenditures.
Tan also outlined that Intel would retain its investment unit, Intel Capital, while divesting 51% of its Altera programmable logic division to Silver Lake Partners for $9 billion, which is expected to generate significant cash for the company.
Stressing the importance of empowering engineers, Tan emphasized that many previous managerial performance indicators at Intel had focused excessively on team size rather than productivity. He expressed a commitment to fostering a culture where leaders are expected to accomplish more with fewer resources. This includes empowering top talent, slicing through bureaucratic layers, and enabling smaller, nimble teams while maintaining a balance with talent retention.
Streamlining Internal Processes
Tan noted the considerable time and resources being consumed by unnecessary administrative tasks, advocating for a radical simplification approach to allow staff to concentrate more on customer needs.
He instructed leadership to minimize superfluous meetings and reduce the number of participants to enhance productivity. Additionally, he proposed modernizing internal processes through implementing live dashboards and improving data accessibility to facilitate informed decision-making.
As part of these changes, Intel will revert to a requirement of four days in the office per week as of September 1, 2025, an adjustment from the current three-day policy. Tan addressed the need for collective effort in overcoming the company’s challenges, sharing a resolve reminiscent of strategies employed by former CEO Andy Grove.
Tan sees this as a pivotal moment for Intel, suggesting that a significant comeback could define the company’s legacy in the long term. He affirmed that Intel’s former reputation as a leader in innovation could be reclaimed through diligent reform.
In closing, he expressed gratitude to employees for their contributions in the first quarter and communicated his commitment to rebuilding trust with customers. He acknowledged that external factors, including tariffs, would impact business operations, potentially fostering caution among clients.
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venturebeat.com