Intel’s new CEO Pat Gelsinger is taking dramatic steps to reshape the struggling chipmaker after disappointing financial results and mounting pressure from investors. The veteran tech executive, who returned to Intel in 2021 after previously spending 30 years at the company, faces the daunting task of reviving a business that has fallen behind rivals like TSMC and Nvidia.
Gelsinger recently announced a restructuring plan aimed at streamlining operations and cutting costs. The strategy focuses on creating smaller, more efficient teams while eliminating unnecessary management layers. This move comes as Intel reported a $1.4 billion loss in its most recent quarter, with revenue declining by 3% compared to the previous year.
“We need to make tough decisions now to ensure Intel’s long-term success,” Gelsinger told employees in a company-wide memo. “Our current structure has become too complex and slows decision-making when we need to move faster than ever.”
The restructuring will impact thousands of employees across the organization. Intel had already cut about 15,000 jobs last year as part of an earlier cost-reduction effort. The new plan aims to save an additional $10 billion by 2025 through both workforce reductions and operational changes.
Industry analysts view these changes as necessary but challenging. “Intel has fallen behind in both manufacturing technology and chip design,” said Patrick Moorhead, president of Moor Insights & Strategy. “Gelsinger needs to make radical changes while still keeping the talent needed to execute their ambitious technology roadmap.”
A key element of the restructuring involves revamping how teams operate within the company. Intel will replace its traditional hierarchical structure with smaller, cross-functional groups empowered to make decisions faster. Each team will have clear performance metrics tied to company-wide goals.
Intel also plans to consolidate its global operations. The company will reduce its manufacturing footprint while focusing investments on strategic facilities in the United States, Ireland, and Israel. This approach aligns with Intel’s goal of becoming a major contract manufacturer for other chip designers through its Intel Foundry Services division.
The company’s return-to-office policy is also changing as part of the restructuring. Most employees will now be required to work on-site at least four days per week. Gelsinger believes in-person collaboration is essential for innovation and problem-solving in the semiconductor industry.
“The semiconductor business is fundamentally collaborative,” Gelsinger explained during a recent earnings call. “The best ideas come when engineers can work side by side, solving complex technical challenges together.”
Financial pressure has intensified the urgency of these changes. Intel’s stock has dropped nearly 40% since Gelsinger took over as CEO, while competitors like Nvidia have seen their market values soar. Activist investors have been pushing for more dramatic action, including potentially splitting the company into separate design and manufacturing businesses.
For now, Gelsinger remains committed to his integrated strategy, keeping design and manufacturing together while making both more efficient. He has staked Intel’s future on regaining manufacturing leadership through a series of new process technologies set to roll out over the next three years.
The restructuring also includes a renewed focus on Intel’s core business of making CPUs for personal computers and data centers. The company will reduce investments in non-core areas while doubling down on its most profitable product lines. This represents a shift from the diversification strategy pursued under previous leadership.
Market reaction to the restructuring announcement has been cautiously positive. Intel’s stock price rose 3% following the news, though many investors remain skeptical about the company’s ability to execute such ambitious changes while competing with nimbler rivals.
“The semiconductor industry moves at lightning speed, and Intel needs to prove it can adapt quickly,” said Toni Sacconaghi, an analyst at Bernstein Research. “Gelsinger has the right vision
