Market Analysis

Intel CEO Plans Bold Changes to Tackle Bureaucracy and Spark Innovation

Mellissa · 25 Apr27.5K Views

Image Credit: AP

Intel (INTC) CEO Lip-Bu Tan kicked off his first quarterly earnings presentation by unveiling a significant workplace restructuring aimed at boosting innovation within the company.

Tan revealed that he would be reorganizing Intel so that the leadership of all key product manufacturing teams would report directly to him. Additionally, he announced a new policy requiring employees to return to the office four days a week, starting in the third quarter. Tan emphasized the need to “bring back critical lost talent” and attract new hires, as the company has faced high executive turnover in recent years.

Meanwhile, Intel is reportedly planning to reduce its workforce by 20%, although the company did not confirm the layoffs during its call with analysts. This potential cut would follow previous reductions, including 12,000 job losses announced in 2022 and another 15,000 expected in 2024.

Tan explained that Intel would empower smaller teams to make faster decisions and operate more efficiently by removing layers of management that hinder progress. CFO David Zinsner added that streamlining the organizational structure would help the company cut $500 million in operational expenditures, bringing the 2025 budget down to $17 billion.

Intel’s first-quarter earnings exceeded Wall Street's expectations, but its disappointing outlook sent the stock down more than 6% in after-hours trading, before it partially recovered following Tan’s comments. Over the past year, the stock has fallen by 38%.

Intel, the only U.S. chipmaker capable of producing advanced semiconductors at scale, has struggled to keep pace in the AI-driven market and has lost market share to rival Advanced Micro Devices (AMD). The company’s manufacturing business has been losing money, which has weighed on its financial performance.

Former executives have pointed to poor decision-making and several critical missteps as factors contributing to Intel’s decline, with some suggesting that reducing middle management could help the company turn things around.

However, some current employees in Intel's manufacturing division have expressed concerns about the potential layoffs, fearing that further cuts could lower morale and disrupt the company’s plans to introduce 18A, a highly anticipated new manufacturing technology.

Tan acknowledged that organizational complexity and bureaucracy had stifled innovation and agility. He vowed to address these issues by providing more room and resources for new ideas and talent to grow, and to eliminate the silos that have led to poor execution.