Semiconductor giant Intel is brewing a major organizational restructuring plan. According to Bloomberg, it is expected to officially announce the layoff of more than one-fifth of its staff this week. This large-scale layoff is the first major restructuring measure implemented by the new CEO Lip-Bu Tan, and recent consumer market promotions and consumer-friendly policies indicate that Intel is undergoing extensive reforms.
Lip-Bu Tan, who took over as CEO in March this year, is a veteran in the industry with senior experience in semiconductor design automation tools at Cadence Design Systems Inc. He replaced Pat Gelsinger, who was dismissed last year. His timing coincides with serious market concerns for Intel, as the former chip leader has gradually fallen behind technologically, especially in processor areas where it lags behind AMD and has been surpassed by competitors like Nvidia in the rapidly growing AI computing field, leading to three consecutive years of declining sales and losses.
Prior to this, a layoff plan of about 15,000 people was announced last year. By the end of 2024, Intel's total workforce was 108,900, already reduced from 124,800 the previous year. Based on 108,900 employees, a 20% layoff means more than 21,000 employees will be affected. Intel's representative declined to comment on this news.
Major Consumer Market Policy Change: Massive Inventory of 15th Generation CPUs
Intel experienced oxidation and unusability issues with its 14th generation processors last year, causing the company known for quality, stability, and customer support to fall from grace. The launch of the 15th generation Ultra 200S series even saw a "performance regression" for the first time, causing consumers to start abandoning Intel and choosing AMD processors.
In the competitive German computer parts market, AMD even achieved a 92% market share in January and February. Although consumer market revenue represents a small portion of Intel's total revenue, the deepening impression of "Intel's decline" among consumers has severely shaken investors' confidence in Intel.
Taiwan has also seen rare discounts on Intel's 15th generation Ultra 200S, attempting to regain consumer confidence. Recently, they introduced an "overclocking warranty policy" where users can enjoy a 3-year limited warranty from Intel by enabling the "200S Boost" overclocking profile through specific Z890 motherboard BIOS.
According to computer retailers, Intel's recent low-profile approach to retailers and consumers is unprecedented in the past fifteen years. However, retailers also believe that in a market with limited performance choices, consumers may still find it difficult to buy into Intel's "minor reforms".
Transformation Pains: TSMC Refuses Cooperation with Intel
To restore Intel's glory, besides processor and AI competitiveness, semiconductor manufacturing processes might be a more critical aspect. Former CEO Gelsinger attempted an ambitious transformation plan, including massive factory expansion projects (like the Ohio plant plan, originally intended to become the world's largest chip production center) and seeking to transform Intel into a foundry manufacturer, aiming to become the second-largest foundry after TSMC. However, this ultimately may have increased the company's financial burden, and Intel has now postponed most expansion plans.
Additionally, Intel originally hoped for financial support from the 2022 US Chips and Science Act, but the plan is currently uncertain under the Trump administration. The possibility of manufacturing cooperation with TSMC, which has been highly anticipated in recent months, seems to be diminishing. TSMC CEO C.C. Wei recently stated that the company will focus on its own business and has no plans to establish a joint venture, raising uncertainty about Intel's importance in the US semiconductor strategy.
Intel is scheduled to release its first-quarter financial report on Thursday (April 25), when new CEO Lip-Bu Tan is expected to have the opportunity to explain more detailed reform strategies to investors, which will be his first test.
Further Reading: TSMC Denies "Cooperation with Intel" During Earnings Call, C.C. Wei: Technology Will Never Leak, No Joint Venture Plans
