The American semiconductor giant will carry out thousands of layoffs globally, particularly impacting its production hub in Oregon and casting doubt on the future of its Foundry business and major industrial projects.
Intel, one of the world leaders in microchip manufacturing, faces one of the largest restructurings in its recent history with the announcement of eliminating between 15% and 20% of its factory workforce. This decision will have devastating effects on thousands of families and leave a deep mark on the U.S. tech industry.
Massive Cuts at the Heart of Intel’s Production
The news was confirmed through an internal email signed by Naga Chandrasekaran, Intel’s Vice President of Manufacturing, which was leaked to several U.S. media outlets. The plan indicates that most layoffs will occur throughout July, especially affecting the Hillsboro (Oregon) plants, which are considered the epicenter of the company’s production and R&D, where nearly 20,000 people are employed.
Intel has not specified the total number of affected employees, although analysts estimate that global layoffs could exceed 10,000, in addition to the 15,000 already executed in 2024. The company argues that these "painful" cuts are essential for regaining profitability and ensuring the viability of the company in the face of sustained revenue decline, fierce competition in the PC and data center markets, and lagging behind rivals like TSMC, Samsung, and NVIDIA in advanced chips for artificial intelligence.
Factors Behind the Decision
The main reasons for these cuts include:
- Stagnation of sales in key sectors, such as personal computers and data centers.
- Failure in the development and production of advanced AI chips, currently dominated by companies like NVIDIA.
- Organizational complexity and excessive layers of management, which the new CEO, Lip-Bu Tan, aims to simplify.
- Regulatory uncertainty: The Biden administration granted Intel $7.9 billion in federal subsidies, but some of these funds are under review by the new U.S. government, hindering the expansion and opening of new factories, such as the one in Ohio, now postponed to 2030.
Impact on Oregon and the Tech Ecosystem
The majority of the impact will be felt in Oregon, where Intel is the largest private employer, a driver of innovation, and one of the pillars of the local economy. The state had approved $115 million in incentives for an expansion that is now in question. If Intel fails to meet hiring and tax generation commitments, the state could reclaim the funds.
Changes in Strategy and Intel’s Future
Intel assures that the layoffs will not only affect factory workers but also engineers, technicians, and researchers in its Foundry division, responsible for cutting-edge innovations. The company has ruled out voluntary layoffs or early retirements, prioritizing selective cuts based on the strategic relevance of each area, individual performance, and project realignment.
The new CEO has emphasized the need to streamline decision-making, reduce bureaucracy, and focus resources on areas with the greatest future potential, such as on-demand manufacturing for third parties and the adoption of new technologies.
The Challenge of Retaining Talent in Times of Cuts
Despite the severity of the layoffs, Intel’s management stresses its commitment to retaining and attracting top-tier engineering talent, which is essential to compete in an industry that is advancing at a breakneck pace and where investment in R&D and execution capability are key to technological leadership.
The news coincides with the fragile state of the semiconductor market and the uncertainty surrounding large-scale industrial investments in the U.S. The market reacted positively in the short term, with a 3% rise in Intel’s shares, reflecting investor approval of the cost-containment measures, but the company’s future and its impact on the U.S. tech economy remain marked by uncertainty and the challenge of reinventing itself in an increasingly competitive environment.
Source: oregonlive