Intel CEO Lip-Bu Tan Launches Major Restructuring to Revive Innovation

Intel Logo (Image Credit: Lin Zhijia)

AsianFin -- Intel CEO Lip-Bu Tan kicked off his first quarterly earnings call as the chipmaker's new chief by unveiling a sweeping workplace overhaul designed to reignite innovation.

Tan announced a companywide reorganization that places the leadership of "all critical product manufacturing" teams under his direct supervision. As part of the changes, he is instituting a mandatory four-day return-to-office policy beginning in the third quarter.

"We are focused on bringing back critical lost talent and recruiting new people," Tan said, referencing Intel's recent struggles with high executive turnover.

Meanwhile, Intel is reportedly preparing to slash 20% of its workforce, though company leaders did not confirm the layoffs during the earnings call. The rumored cuts would follow the 12,000 job eliminations announced in 2022 and another 15,000 reported in 2024.

"We will empower smaller teams to move faster and make better decisions, and we will significantly reduce the number of layers that get in the way," Tan said.

Intel CFO David Zinsner added that the company's leaner organizational structure has already enabled it to lower projected operating costs by $500 million. Intel expects to spend $17 billion in 2025.

The company reported first-quarter earnings after the bell on Thursday, beating analyst expectations on both revenue and profit. However, a weaker-than-expected outlook sent shares tumbling in after-hours trading.

In the first quarter, Intel posted adjusted earnings per share (EPS) of $0.13 on revenue of $12.7 billion, surpassing Bloomberg consensus estimates, which had forecast EPS of $0.01 and revenue of $12.3 billion.

This compares to EPS of $0.18 and the same $12.7 billion in revenue during the year-ago quarter.

The company's client computing division generated $7.6 billion, ahead of the expected $6.9 billion. Revenue from the data center and AI segment hit $4.1 billion, well above analysts’ projections of $2.9 billion. Intel Foundry revenue reached $4.6 billion, also beating expectations of $4.3 billion.

Intel stock dropped more than 6% following the report, though losses narrowed after Tan's remarks. The stock is down 38% over the past year.

Intel's latest earnings release, the first under newly appointed Tan, who took over the struggling chipmaker last month, comes amid growing concerns over the potential impact of US President Trump’s escalating trade war with China.

Although Intel manufactures most of its chips domestically, the company remains exposed to tariffs on laptops and other electronics assembled in China. Computers are currently exempt from duties, but the Trump administration has indicated it may reimpose tariffs on these products as part of a broader push to target semiconductors in the weeks and months ahead.

Intel — still the only U.S. chipmaker capable of manufacturing leading-edge semiconductors at scale — has been losing ground in the AI race. Its manufacturing unit has struggled with heavy losses, ceding market share to competitors like Advanced Micro Devices (AMD).

Former Intel executives have criticized what they describe as years of mismanagement and bloated staffing levels. In March, they told Yahoo Finance that trimming middle management could be key to a turnaround.

But inside Intel, tension is rising. Two current manufacturing division employees told media that workers are bracing for layoffs. They warned that additional cuts could damage morale and disrupt efforts to launch 18A, Intel's much-anticipated new chip process, which could help the company outpace top rival TSMC (TSM).

"Organizational complexity and bureaucracies have been suffocating the innovation and agility we need to win," Tan said.

"New ideas and people who generate them have not been given the room or resources to incubate and grow," he added. "The unnecessary silos have led to bad execution. I'm here to fix this."