In June 2025, Intel also confirmed a restructuring plan to eliminate 15,000 employees (or 15 percent of its worldwide staff) in an ambitious cost-reduction program. The layoff, which targets its US and European business, is expected to save Intel 10 billion a year as chip demand is dropping and competition is intense. Intel’s shares declined by 5 percent after hours.
The action is part of broader struggles in manufacturing amid a slowdown in the semiconductor business in the wake of the pandemic, especially the demand for PC and server chips. Intel, which was once a chipmaking giant, now has to contend with competitors such as TSMC and NVIDIA, whose production technology has surpassed that of Intel. Last year, the company lost 7 billion dollars due to its foundry business (which is designed to compete with TSMC).
Pat Gelsinger, Intel CEO, termed the downsizing exercise a painful one, but it had to be done so that Intel could regain competitiveness. The laid-off employees (consisting of drivers and engine makers) will be given severance packages, although few details have been given yet. This announcement has ignited the anger of employees, with some blaming Intel’s executive compensation, which has been 2 billion in the last five years.
The job cuts worry the local economies, especially in Oregon and Arizona, where thousands of people are employed at Intel. The governor of Oregon has promised to aid former workers, but community members are worried about long-term economic repercussions. The chip manufacturing giant Intel is declining to operate in Ireland. When cuts abroad are already being initiated, this will ring alarm bells on the region’s resilience to the slowdowns being experienced worldwide.
Rivals are using Intel’s woes. TSMC’s control on advanced chips has enticed big players such as Apple, and chip server AMD is securing a market share. Intel has run into trouble trying to switch to AI chips, and analysts have cast doubt as to whether it could do it successfully in a market dominated by specialists.
The cyclical nature of the chip industry is visible, yet Intel’s problems are deeper. It’s a late 7nm process node, and legacy manufacturing has plundered its advantage. The results will not be obtained soon, as the company will spend $20 billion to build new factories in the United States with CHIPS Act funding.
The response has been mixed on Wall Street. Some analysts view the layoffs as a practical measure to reduce operations, while others caution about the loss of innovation. Intel’s R&D budget is also considered vital to restoring its technological leadership, but cost-cutting is also taking its toll. The success of the foundry ambitions will determine this company’s long-term prospects.
Some employees, such as Maria Lopez, a 12-year veteran at Intel, posted on social media that they felt dismayed. I posted, “We have given everything, but executives are not giving out their bonuses.” These sentiments are telling of increased mistrust, and unions in Europe are organizing protests. In the U.S., workers who are not union members do not have a strong position to oppose the cuts.
A global chip supply chain that just emerged from shortages caused by the pandemic is caught in new turmoil. Intel’s lowered production may increase the price of PCs and data centers, as there might be an increased shortage. The gap might not be filled by smaller manufacturers because clients who book TSMC’s capacity pay high margins.
Intel’s fortunes are also related to geopolitical changes. Hostilities between the U.S. and China regarding chip exports have adversely affected Intel’s sales in its biggest market, Asia. The proposed factories in Ohio and Germany are intended to localize the company’s production, yet analysts explain that rising trade restrictions might aggravate these projects.
Labor market shits can also be strengthened with the help of the layoffs. Tech workers who once seemed in high demand now have job insecurity since businesses emphasize efficiency. There is talk of retraining the laid-off Intel workers, but there is no easy way to change to other areas, as they will be spoiled by designing chips.
Intel’s restructuring involves shedding non-core companies like the memory chip unit to concentrate on high-growth sectors. However, when one sells in a bad market, they will make a low profit. The firm already has a debt burden of $50 billion that puts pressure on it and hinders its flexibility to cope with sustained downturns.
Intel has faced opposition to the expansion plans, especially from environmental organizations. Its expanded factories demand a lot of water and energy, which is reaching a limit in drought-prone areas such as Arizona. Intel claims that it is committed to using sustainable practices, but the opponents want tighter monitoring of its performance in environmental matters.
The chipmaker’s future lies in implementing the turnaround strategy. There is some doubt that Gelsinger will manage to have the South Korean company on par with TSMC in terms of process nodes by 2026, which is the goal he set. Retaining talent through layoffs will be one of the elements that Intel will have to place a lot of emphasis on because competitors lay off their experienced engineers to power them.
There is a short-term pain among investors. The gloomy future is highlighted by the fact that Intel is expected to generate lower revenue in 2025 than in the previous year by a margin of 10 percent. However, some hopefuls refer to it playing a strategic role in the U.S. technology sovereignty and its possible revival in a cyclical market.
The retrenchments spell doom to Intel and the chip industry at large. The demand for specialized chips will see traditional competitors such as Intel become obsolete. While cost-cutting will purchase time for the company, the company will only survive within the competitive environment through innovation and implementation.
