In a strategic move to enhance operational efficiency, the CEO of Intel, Lip-Bu Tan, is actively working on a plan to streamline the company’s operations. This includes a significant reduction in various manufacturing initiatives that were previously in the pipeline.
In its recent earnings report for the second quarter, Intel announced that it would be postponing or entirely scrapping several manufacturing projects. Notably, the company has decided to halt its previously planned facilities in Germany and Poland, which included an assembly and testing site in Poland and a semiconductor manufacturing plant in Germany. These projects have been on hold since their suspension in 2024, shortly after their initial announcement.
Additionally, Intel is set to consolidate its testing operations, shifting focus from Costa Rica to its facilities in Vietnam and Malaysia. This strategic realignment aims to optimize resources and enhance productivity across its global operations.
During the earnings call, Tan expressed concerns about past capacity investments, stating, “The capacity investments we made in recent years were ahead of market demand and proved to be excessive. Our manufacturing footprint has become unnecessarily fragmented. Moving forward, we will align our capacity growth with actual volume commitments and ensure that capital expenditures are closely tied to tangible milestones.”
Furthermore, Intel has announced a further delay in the opening of its $28 billion chip manufacturing facility in Ohio, which was initially slated for completion in 2025. This facility has already faced delays earlier this year.
This quarter marked the first full reporting period under Tan’s leadership, who took over as CEO in March. He has emphasized his commitment to eliminating inefficiencies within the company by divesting non-core units and streamlining operations.
“We have significant work ahead in creating a more efficient and streamlined organization, and this will remain a key focus for me in the upcoming quarter,” Tan stated during the earnings call. “Our objective is to minimize redundancies and enhance accountability at all levels of the organization.”
In terms of workforce updates, Intel has undergone several rounds of layoffs, resulting in a workforce reduction of approximately 15%. The company aims to conclude the year with around 75,000 employees, having successfully eliminated 50% of management layers through these layoffs.
In June, Intel communicated internally about plans to lay off between 15% to 20% of its workforce in the Intel Foundry division, which is responsible for designing and manufacturing chips for external clients. At the end of 2024, Intel had approximately 108,900 employees, a decrease from 124,800 at the end of 2023, as reported in their annual filing with the Securities and Exchange Commission.