Intel (INTC) , a large tech company estimated to have about 108,000 employees worldwide, is implementing a new game plan as it struggles to get ahead of fierce competition.
Over the past few years, Intel has struggled to keep up with competitors such as Samsung, NVIDIA, and IBM, due to its challenges in transitioning to smaller, more efficient chip manufacturing processes.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter đź’°đź’µ
Intel’s stock price has declined by about 63% over the past five years.Â
Related: IBM gives employees a rude awakening with harsh new policy
The company’s first-quarter earnings report for 2025 revealed that its revenue remained flat year-over-year as total revenue from its products declined by 3%. Intel also faced a net income loss of roughly $887 million during the quarter.
“The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth,” said Intel CEO Lip-Bu Tan in the earnings report.
Intel’s organizational chart will soon look a bit different.
Image source: picture alliance/Getty Images
Intel has harsh news for employees
During an earnings call on March 24, Tan warned that one of these changes entails significant adjustments to how teams across the company operate.
“I am taking swift actions to simplify the way we do business and drive transparency and accountability across the company,” said Tan. “We will empower smaller teams to move faster and make better decisions, and we will significantly reduce the number of layers that get in their way. As a first step, I have flattened the structure of my leadership team.”
He said that employees who work in product, manufacturing, and GNA teams now directly report to him instead of being spread out over multiple layers.
“This will allow me to get closer to our product and engineering groups and work directly with them to close the gaps with competition more quickly,” said Tan.
Related: Amazon CEO gives hard-nosed message to employees
He also said that, starting in the third quarter of this year, employees will be required to work in the office four days a week.
“I know firsthand the power of teamwork, and this action is necessary to reinstill a more collaborative working environment, improving efficiency, and boosting innovation,” said Tan. “By eliminating inefficiencies and transforming how we do business, I strongly believe we can reduce our cost while securing our future.”
Another part of Intel’s new cost-cutting strategy, which aims to save $17 billion in 2025 and $16 billion in 2026, also includes job cuts. According to a recent report from Bloomberg, Intel is reportedly planning to let go of 20% of its staff in an effort to remove bureaucracy within the company.
In an email sent to employees on April 24, Tan confirmed that the company will be conducting layoffs, which will happen “quickly,” according to a new report from The Verge.
“There is no way around the fact that these critical changes will reduce the size of our workforce,” said Tan in the email. “As I said when I joined, we need to make some very hard decisions to put our company on a solid footing for the future. This will begin in Q2 and we will move as quickly as possible over the next several months.”
However, during the recent earnings call, Intel Chief Financial Officer David Zinsner said that the company has “not yet identified” how many jobs it is planning to cut.
Intel follows in Amazon’s footseps
Intel’s decision to simplify its organizational structure, remove bureaucracy and scale back remote work mirrors recent comments from Amazon CEO Andy Jassy.
In his 2024 annual letter to shareholders, Jassy emphasized that Amazon (AMZN) needs to work at a faster pace so it can operate in “fiercely competitive market segments,” and part of that includes eliminating bureaucracy within the company culture.
“Another way to gain speed is to eliminate bureaucracy,” said Jassy. “There is a difference between process and bureaucracy. When you’re running something at scale, you need mechanisms to deliver the right experience and constant improvement for customers. However, as companies grow and add more managers, unneeded processes get layered on that add little value.”
More Labor:
Amazon CEO gives employees a harsh wake-up callStarbucks CEO has a tough message for employees after layoffsSnapchat CEO teaches new employees a strict lesson
Jassy also said that Amazon has to be “competitive” to keep up with the pace of artificial intelligence, and part of that requires scaling back remote work and collaborating more in person.
“Of course, you can invent with everybody remote (and some cultures seem to prefer that),” said Jassy. “However, in my experience, it doesn’t compare to being in the same room. The energy, the pace, the spontaneous brainstorming, the willingness for people to jump in, the way ideas evolve in real time, and the post-meeting iteration is much better when in the same room — and yields better outcomes for our customers and teams.”Â
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
