Intel’s new CEO, Lip-Bo Tan sent a blunt message to the employees, stating that the company was to be reorganized to be more efficient. He said that there will be a shortage of employees, but he did not announce the required number of exact numbers.
Bloomberg reported that Intel is rumored 20% of its workersWhich was about 108,900 people at the end of 2024. The amount of about 21,780 jobs was lost by 20% deduction. And when Tan can result in a lot of job cuts as a result of the changes announced today, which will start in the second quarter, he did not tell the expected numbers.
Tan Letter to employees Q1 2025 coincidence with the release of quarterly numbers. For earnings, Tan said, “This was a step in the right direction as we granted revenue, gross margin and EPS (per share income) above our guidance, (former interim cum-CEOos Dave Zinsner and Mitchell Johnson) led by the leadership of them. I want to thank both of them, and all of you, for good execution.”
But he quickly warned, “We need to build this progress-and it will not be easy. We are navigating a rapidly unstable and uncertain macroeconomic environment, which is reflected in our Q2 approach. At the top of it, there are many areas where we must improve. We need to face our challenge and we need to take Swift action to go back to the track.”
“There is no way around the fact that these significant changes will reduce our task force size. As I said, when I joined, we need to take some very difficult decisions to keep our company on a solid rung for the future. It will start in Q2, and we will move forward as soon as possible in the next several months.”
In his letter, Tan said that Intel had not set any headcon a target.
He said, “Everything we have determined is a new non-GAAP operating expans target in 2025 for $ 17 billion, below the target of $ 17.5 billion, and $ 16 billion in 2026.” “There is no way around the fact that these significant changes will reduce the size of our workforce. As I said, when I joined, we need to take some very difficult decisions to keep our company on a solid rung for the future. It will start in Q2 and we will move forward as soon as possible in the next several months.”
Tan’s approach about Intel’s culture
Tan has inherited a difficult situation as Intel AI/Graphics is losing to NVDia and X86 processor market in the market for advanced micro devices. He did not reveal words about criticizing Intel’s culture as a big company.
“As I have said, it begins to resume our culture. The response I received from our customers and many of you is consistent. We are set very slow, very complex and very ways – and we need to change,” he wrote.
He said that “the flattery executive team (ET) structure that I shared last week was the first step.” The next step is to run more simplicity, speed and cooperation throughout the company, he said. And so he has changes coming. Among them: Recalling the company’s AI strategy, Tan said in an analyst call. He also said that Intel’s financial performance is not where he should be and Intel will reduce its capital expenses.
He also said that Intel would not close Intel Capital and invest in external companies. Intel is selling 51% of its Altera programmable logic division to Silver Lake Partners. The value of Altera is $ 9 billion, and therefore the deal will generate considerable cash for Intel.
“We need to bring back our roots and empower our engineers. That is why I raised my core engineering work in ET. And many of the changes we are making are designed to remove cumbersome workflows and processes and make engineers more productive who slow down the pace of innovation,” Tan said.
To invest necessary in engineering talent and technology roadmap, Intel needs to find new ways to reduce costs, he said.
He said, “While we have taken important action in the previous year, our current cost structure is still above the competitive benchmark. Keeping this in mind, we have reduced our operating expenditure and capital expenses targets, which I will discuss during my investor call this afternoon.”
“As we refocus on engineering, we will also remove organizational complexity. Many teams are eight or more layers, which creates unnecessary bureaucracy that slows us.
As a long time chip engineer, it is no surprise that tan focuses on empowering engineers to overdose. He wrote, “I have been surprised to know that, in recent years, the most important KPI for many managers in Intel has been the size of their teams. Moving forward, this will not be a matter. I am a big believer in the philosophy that the best leaders are the most done with the least people. We will embrace this mentality as much as possible.”
He said that the company will empower small teams to move faster and to make better decisions and reduce the number of layers on the way. He said that the Intel would balance the cut against the need to maintain and recruit the major talent. He said that he would keep the team informed.
Streamlined procedures
Tan said that it is going to open an eye for him how much time and energy is spent on internal administrative functions that do not extend the business forward.
He said, “We need to make fundamentally simple to maximize the time spent in focusing on our customers,” he said.
He said, “I am instructing my leaders to eliminate unnecessary meetings and reduce the number of people present in the meeting. A lot of valuable time is wasting. We will modernize procedures with focus on live dashboards and to ensure better data to ensure that we have real -time insight that we need to make better and fast decisions,” he wrote.
One of the things he is making alternating is the traditions of Intel’s formal insight and OKR needs. He thinks that being accountable and absorbing response can be done in a simple and more flexible way.
He said that the company will return to work in office four days a week, instead of three days a week on the site. The four-day-office plan applies on September 1, 2025.
He said, “I realize that it is a lot, but we are playing from behind and we need to rally as a team to keep ourselves in the best position to win.”
It is very difficult drug, and not unlike hard policies that will do the pre -Intel’s long -time CEO, Andy Grove,.
I am talking about the opportunity to basically strengthen an industry icon. To pull a return to business schools for the coming generations to come. Deploy them on a scale to create new techniques and to change the world for better.
“Intel was once widely seen as the most new company in the world. There is no reason that we cannot return there, so until we run the changes required for improvement,” Tan wrote. “It’s going to be difficult. This will require painful decisions. But we will make them know what we should do to do better service to our customers because we create a new intel -new for the future – and I have great faith in the power of our team and our people.”
In the closing, he thanked the employees “for what you did in Q1.” In an analyst call, he said he had joined five weeks ago. He also replaced the interim owners as well as former CEO Pat Gailinger, who resigned in December 2024.
Tan said that his motto was to promise further, and he would not rest until Intel rewrite his customer’s confidence. Intel stated that tariffs would definitely affect its business, partially cautious it would generate among customers.
