Intel is currently undergoing a significant transformation, marked by workforce reductions, a renewed focus on Artificial Intelligence (AI), and strategic shifts in its business operations, all aimed at revitalizing the company and paving the way for future growth.

Navigating Layoffs and Restructuring

Under the leadership of CEO Lip-Bu Tan, who assumed the role in March 2025, Intel has been implementing a series of cost-cutting measures, including significant layoffs. The company has completed a 15% workforce reduction. Intel aims to reduce its headcount to approximately 75,000 employees by the end of the year, a substantial decrease from the nearly 109,000 employees reported at the end of 2024. These cuts include layoffs already completed in the second quarter of 2025, where Intel eliminated about half of its management layers. These "hard but necessary decisions" are intended to streamline the organization, improve efficiency, and increase accountability. In addition to workforce reductions, Intel is halting fab construction plans for Germany and Poland, with an overall goal of consolidating its manufacturing operations across fewer sites. The company is also reducing its capital expenditure target for 2025 to $18 billion.

Embracing Artificial Intelligence

A key element of Intel's transformation is a strategic pivot towards AI. The company plans to develop a multifaceted AI strategy that includes building off-the-shelf workload-specific full-stack solutions for AI, bespoke solutions, and foundry partnerships. Intel's management sees the company's silicon photonics capabilities as one of its advantages in the AI data center realms. Intel is adjusting its product roadmap to position itself to make best-in-class products for new and emerging AI workloads. This includes a focus on emerging areas of interest such as reasoning models, Agentic AI and physical AI. Intel introduced new deployment options for Intel Gaudi 3 AI accelerators. Intel Gaudi 3 AI accelerators are now available in PCIe and rack scale systems, offering scalable, open solutions for enterprise and cloud AI inferencing. The company is also extending the Intel Arc Pro GPU lineup to prosumers and AI developers.

Charting a Path Towards Renewed Growth

Intel's transformation involves several key initiatives:

• Refining AI Strategy: Intel aims to refine its AI strategy, focusing on emerging areas of interest and developing full-stack AI solutions for enterprise customers.
• Focusing on Foundry Customer Service: Intel is prioritizing building trust with its external foundry customers and ensuring its wafers meet their requirements for power, performance, area, cost, quality, yield, reliability, and on-time schedule.
• Product Innovation: Intel's product roadmap is being recalibrated to deliver AI performance across the full stack, from the client to the cloud. The company continues to invest in its 18A process technology. Intel confirmed that Panther Lake, its next major CPU, is set for release in late 2025.
• Cultural Transformation: Intel is emphasizing the need for cultural transformation within the company, advocating for a team-oriented approach that encourages innovation, reduces bureaucracy, and attracts top engineering talent.

Challenges and Opportunities

While Intel is making strides in its transformation, it faces several challenges:

• Market Share Competition: Intel is widely observed to be losing market share in segments like data center AI to AMD.
• Manufacturing Costs: Scaling yields and costs to competitive levels remains a critical challenge for Intel.
• Financial Performance: Intel's Q2 2025 financial results revealed a miss on earnings per share (EPS) expectations.

Despite these challenges, Intel's strategic shift towards AI, focus on operational efficiency, and commitment to product innovation present significant opportunities for renewed growth. The company's success will depend on its ability to execute its strategy effectively, rebuild trust with its workforce, and capitalize on the growing demand for AI solutions.