The relaunch plan

Intel's revolution: cutting 25,000 jobs and abandoning European production sites

CEO Lip-Bu Tan launches drastic plan: global layoffs, stop of factories in Germany and Poland, focus on AI and 18A chips. Objective: to become competitive again against Nvidia and TSMC

by Angelica Migliorisi

25 July 2025

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La sede centrale di Intel a Santa Clara, California, Stati Uniti, 23 luglio 2025. EPA/JOHN G. MABANGLO

3' min read

Key points

Unprecedented downsizing
Stop in Europe and global reallocation
Rise in losses, revenues above expectations
The Bet on AI
A new Intel
The weight of Nvidia and TSMC

3' min read

In a time when chips are worth, at least politically, more than gold, Intel is playing its last hand. Squeezed between Nvidia's design dominance and the manufacturing supremacy of Taiwan's Taiwan Semiconductor Manufacturing Company (TSMC),the long-established Californian company is drastically reducing headcount and investment in an attempt to enter the artificial intelligence (AI) game. Leading the mission is former venture capitalist Lip-Bu Tan.

An unprecedented downsizing

Intel has announced a staff reduction on a historic scale:by the end of 2025, the group will drop from 108,900 to 75,000 employees, a net cut of more than 25,000 jobs. The cuts, which have already begun in recent months with a first wave of around 15,000, involve redundancies, voluntary departures and turnover freezes.

"We are making difficult but necessary decisions to simplify our structure, improve efficiency and strengthen accountability at every level, CEO Lip-Bu Tan wrote in an internal message.

Tan, who took over in March after the exit of Pat Gelsinger, has initiated a corporate transformation that aims to cut costs, bureaucracy and unprofitable projects. The restructuring plan involves personnel, production sites and technology priorities.

Stop in Europe and global reallocation

Not only redundancies. Intel has also officially abandoned plans to build new factories in Germany and Poland, which had already been suspended since September 2024. A choice that confirms the downsizing of the group's European ambitions, which now concentrates its resources in areas considered more strategic and sustainable.

The company also announced the relocation of assembly and test operations from Costa Rica to larger facilities in Vietnam and Malaysia, where Intel already has established manufacturing facilities. The Costa Rican centre will continue to house some engineering and corporate functions, but its operational focus will be greatly reduced.

In the US,the construction of the large plant in Ohio will slow down again. Intel confirmed that the priority today is to make the existing production network more efficient rather than expanding new sites in an uncertain timeframe.

Increasing losses, revenues above expectations

In the second quarter of 2025, Intel posted a net loss of USD 2.9 billion, or 67 cents per share, worsening the previous year's figure (1.6 billion loss). Excluding non-recurring items, the loss was 10 cents per share, while analysts had expected a small profit on average.

The positive news is that revenues remained stable at USD 12.9 billion, exceeding Wall Street's forecast of USD 12 billion. For the third quarter, Intel expects revenues of between $12.6 billion and $13.6 billion, a sign of possible stabilisation, although still uncertain.

The company also confirmed that it is on track to meet its cost reduction targets, with a plan to reduce operating expenses to USD 17 billion by 2025 and USD 16 billion by 2026.

The bet on AI

The most ambitious part of Lip-Bu Tan's strategy concerns the return to innovation. After missing the mobile train and lagging behind in artificial intelligence, Intel wants to get back into the advanced chip segment. The company is banking on the new 18A manufacturing process, which is considered essential to compete with TSMC in high-performance chips.

However, Tan made it clear that the next technology node, 14A, will only be developed if Intel can secure external customers willing to invest. In other words, no new plants without proven demand.

"In recent years we have invested too much, too early, without adequate demand. This has fragmented and made our production network inefficient. Now we have to correct the course," said the CEO.

A new Intel

Tan did not rule out radical changes in the company's industrial model, but for now there is no talk of divesting the manufacturing division, as some analysts had speculated in recent months. Intel will continue to produce in-house, but with a more disciplined approach, avoiding the empty expansion that characterised previous years.

The weight of Nvidia and TSMC

What makes Tan sleepless nights is the merciless comparison with competitors: Intel is today worth some USD 98.7 billion on the stock market, against Nvidia's USD 4,240 billion and the manufacturing powerhouse TSMC, which dominates global production of advanced chips. Markets remain cautious: Intel's stock has risen 13% since the start of the year, thanks to the change of leadership effect, but remains down 30% year-on-year.

Lip-Bu Tan started the reset. Now it remains to be seen whether Intel will be able to reinvent itself or just survive.