intel pivots to ai: layoffs and ohio plant delay signal new strategy
columbus, Friday, 25 July 2025.
intel is enacting a significant strategic shift. the company will delay the opening of its ohio chip plant to after 2030 and reduce its workforce by 15%. this move comes as the company grapples with widening losses. intel will now focus on ai chips and pc processors, aiming to launch ai chips soon and mobile processors based on 18a technology before 2026. ceo lip-bu tan stated, ‘there will be no more blank checks; every investment must make economic sense.’
restructuring for ai focus
intel’s strategic pivot includes significant cost-cutting measures and a shift in manufacturing strategy [3][4]. the company plans to reduce its workforce to 75,000 employees by the end of the year [1][4]. this reduction of approximately 15% aims to streamline operations and reduce expenses [1][3]. intel is also consolidating its assembly and testing operations by moving its costa rica operations to vietnam and malaysia [3][7]. these moves reflect a commitment to leaner operations and greater financial discipline [3].
ohio plant delayed amid strategic shift
the construction of intel’s ohio chip plant is being delayed, signaling a change in the company’s approach to capacity expansion [1][3]. ceo lip-bu tan emphasized that future factory construction will depend on confirmed chip demand, moving away from preemptive building [3]. this cautious approach reflects a commitment to capital efficiency [2][3]. the $28 billion investment in the ohio plant is now slated for completion after 2030, a significant setback from the original 2025 timeline [1].
financial performance and market reaction
intel’s second-quarter revenue of $12.9 billion slightly exceeded expectations [1][3][6]. despite this, the company reported a net loss of $2.9 billion, marking the sixth consecutive quarterly loss [1][6]. this financial strain underscores the need for strategic changes [1]. initial market reaction to the restructuring was positive, with intel’s stock price rising over 3% in after-hours trading, though it later declined [5][6]. this volatility reflects investor uncertainty about intel’s turnaround prospects [5].
analyst perspectives on intel’s future
analysts note that intel’s gross margin of 30% lags far behind competitors like nvidia, which boasts margins exceeding 70% [6]. ceo tan has criticized the previous management’s investments as ‘excessive and unwise’ [6]. he is implementing stricter financial discipline, requiring his personal approval for all major chip designs before production [3][4]. intel aims to regain market share in pc processors and make inroads in the ai chip market, directly competing with nvidia and amd [1][2].
focus on ai and advanced technologies
intel is prioritizing the development of ai-related products, particularly chips supporting complex ai models [1][2]. the company plans to launch ai chips using its latest technologies to compete in the rapidly growing ai market [1][2]. intel is also focusing on its 18a technology for pc chips and plans to launch mobile processors based on this technology by 2026 [1]. additionally, the company views its 14a technology as crucial for long-term growth, aiming to enhance chip efficiency and transistor density [1][2].