Intel is planning to reduce its capital expenditures and eliminate management positions as the U.S. chipmaker aims for a turnaround under its new chief executive, while navigating President Donald Trump’s trade conflict with China. In the announcement made on Thursday, the company detailed a strategy that includes “streamlining the organization, eliminating management layers, and enabling faster decision-making,” following the elimination of 15,000 jobs in the latter half of 2024.
However, Intel also provided a lower-than-expected guidance for the current quarter, which led to a decline in its share value during after-hours trading. The Trump administration’s comprehensive tariff plans have significantly impacted the semiconductor industry. The company, based in California, has projected adjusted revenue ranging from $11.2 billion to $12.4 billion for the quarter ending in June, which is below Bloomberg’s analyst expectations of $12.9 billion. Following the announcement, shares fell by over 5% in after-hours trading.
The earnings report is the first under the leadership of Lip-Bu Tan, who assumed the role of chief executive in March after the board dismissed Pat Gelsinger in December. This comes amid financial struggles for the chipmaker, which is falling behind Taiwan’s TSMC in producing cutting-edge semiconductors and has faced difficulties in establishing a business to manufacture chips for competitors — a venture initiated under Gelsinger’s tenure. Moreover, rival companies have threatened Intel’s position in the PC chip market while it has not yet secured a significant share of the AI data center chip market, which is currently dominated by Nvidia.
Investors have generally received Tan’s appointment positively, seeing it as a sign of a new strategic direction for Intel. Last month, he pledged a “cultural change” within the company, refraining from discussing a potential sale of its loss-making manufacturing unit, as some investors have suggested. Following the financial results announcement, Tan revealed that Intel has decided against spinning off its venture capital arm, a move considered in January before his leadership. Instead, the company will focus on monetizing its existing portfolio while being “more selective on new investments.”
In an internal email to employees, Tan pointed out that “unnecessary bureaucracy” was slowing vital engineering efforts and confirmed that the forthcoming changes would result in workforce reductions. These cuts are slated to begin this quarter and will proceed “as quickly as possible” over the following months. Tan further announced that Intel would enforce a return-to-office policy, requiring employees to work on-site four days a week by September 1.
Additionally, Intel did not factor in restructuring charges in its financial guidance and revised its operational expenses target for 2025 down from $17.5 billion to $17 billion, alongside a $2 billion reduction in its previous capital expenditures target of $20 billion. For the first quarter of 2025, Intel reported an adjusted revenue of $12.7 billion, which was consistent with the previous year and exceeded Wall Street’s consensus of $12.3 billion. The company’s net loss widened to $821 million, up from a $381 million loss the previous year, yet this was still better than analysts anticipated.
Despite being largely spared from Trump’s tariff regime on China concerning semiconductors and related products, the sector faces a national security review that could invite additional tariffs and disruptions to the global semiconductor supply chain. In response, Washington has limited U.S. companies’ exports of AI chips to China, aiming to shield American technology and exert pressure on Beijing. Furthermore, Trump’s opposition to subsidies for chipmakers such as Intel, TSMC, and Samsung — subsidies approved under Joe Biden’s administration to bolster chip production in the U.S. — has added further uncertainty to the program. As of January’s earnings report, Intel had secured approximately $2.2 billion of the $7.9 billion in federal grants assigned under the 2022 Chips Act. Chief Financial Officer David Zinsner indicated that the net capital expenditures for 2025 would range between $8 billion and $11 billion, with the broad estimate reflecting the “uncertainty surrounding the timing of the U.S. government fulfilling their obligations in our chips agreement.”
