Lip-Bu Tan, the brand new CEO of Intel, has sent a blunt message to the workers that the corporate has to reorganize to be more efficient. He said there can be a discount in employees, but he didn’t announced a precise variety of layoffs as expected.
Bloomberg reported that Intel is preparing to take as many as 20% of his staffWhat was about 108,900 people in the long run of 2024. A discount of 20% can be lost around 21,780 jobs. And while the changes that TAN announced today could lead on to considerable work cuts that will begin within the second quarter, he didn’t ask for the expected figures.
SOS Letter to worker Fell along with the publication of the quarterly numbers of Q1 2025. For the result, Tan said: “It was a step in the precise direction once we achieved revenue, gross margin and EPS (winnings per share) over our guidance, which was driven by (former preliminary co-Coos Dave Zinsner and Michelle Johnstons).
But he quickly warned: “We should construct on this progress-and it is going to not be easy. We navigate in an increasingly volatile and insecure macroeconomic environment, which is reflected in our Q2 prospects.
“There is not any way with the undeniable fact that these critical changes reduce the scale of our workforce. As I said, we’ve got to make some very tough decisions to bring our company to a solid foundation for the long run. This starts within the second quarter and we’ll move as soon as possible in the subsequent few months.”
In his letter, Tan said Intel said no reduction in head officials.
“What we’ve got set is a brand new non-GAAP operating cost destination for around $ 17 billion in 2025, from our previously specified goal of $ 17.5 billion and $ 16 billion in 2026,” he said. “There is not any way with the undeniable fact that these critical changes reduce the scale of our workforce. As I said, we’ve got to make some very tough decisions to bring our company to a solid foundation for the long run. This starts within the second quarter and we’ll move as soon as possible in the subsequent few months.”
Tan's view of the culture of Intel
Tan inherited a difficult situation because Intel has lost on the KI/Graphics market against NVIDIA and on the X86 means of process against advanced micro devices. He shredded no words about Intel's culture criticism as a big company.
“As I said, this begins with the revision of our culture. The feedback that I received from our customers and plenty of of them was consistent. We are considered too slow, too complex and too too. We should change,” he wrote.
He said that the “flatter management team (et) that I shared last week was a primary step. The next step is to drive more simplicity, speed and cooperation throughout the corporate, he said. And so he has changes. Among them: The company's AI strategy recorded in an analyst call. He also said that the financial performance of Intel shouldn’t be where it needs to be, and that Intel shouldn’t be where it needs to be. would lower.
He also said that Intel Intel Capital wouldn’t split off and spend money on external firms. Intel sells 51% of its altera programmable logic department to Silver Lake Partners. Altera has a worth of 9 billion US dollars, and so this deal will generate considerable money for Intel.
“We should return to our roots and enable our engineers. That is why I actually have our core functions on the et. And most of the changes we drive needs to be designed more productively by slowing down the stressful work processes and processes that decelerate the pace of innovation,” said Tan.
In order to make the needed investments in technical talent and technology road maps, Intel has to seek out recent ways to cut back the prices, he said.
“While we took significant measures last 12 months, our current cost structure remains to be far above competitive benchmarks. In this sense, we’ve got reduced our operating costs and capital expenses in the long run, which I’ll discuss this afternoon during our investor,” he said.
“While we discover ourselves on engineering, we will even remove organizational complexity. Many teams are eight or more layers deep, which creates unnecessary bureaucracy that slowed us down. I asked the ET to take a brand new have a look at their respective organs.
As a protracted -time chip engineer, it is not any surprise that Tan focuses on enable engineers to do more. He wrote: “I used to be surprised to seek out out that an important KPI for a lot of managers of Intel has been the scale of their teams lately. In the long run, this can not be the case. I’m an important creditor to the philosophy that one of the best managers are best done with the few people.
He said the corporate would enable smaller teams to maneuver faster and make higher decisions and reduce the variety of layers in the way in which. He said Intel would reconcile reductions against the necessity to keep vital talents and recruit. He said he would keep the team up thus far.
Tightening processes
Tan said it was open for him to see how much time and energy are spent on internal administrative work that doesn’t drive the business forward.
“We should simplify this radically to maximise the time we consider our customers,” he said.
“I lean our managers to eliminate unnecessary meetings and reduce the variety of encounters. We will even be wasted.
One of the things he makes optional are Intel's traditions of formal knowledge and okr requirements. He believes that it is less complicated and more flexible to stay accountable and make feedback absorbing feedback.
He said the corporate will return to the office 4 days per week as a substitute of the present days per week. The 4 -day plans will come into force on September 1, 2025.
He said, “I realize that that is lots to maneuver into, but we play from behind and we’ve got to collect as a team to bring ourselves to one of the best possible position to win.”
It is pretty hard medicine and never different from the hard guidelines that Intel's long -time CEO Andy Grove would do.
I’m talking about the opportunity of fundamentally reinventing an industrial icon. To achieve a comeback that can be studied in business school for future generations. To create recent technologies and use them on a scale to vary the world for the higher.
“Intel was once considered essentially the most progressive company on the planet. There is not any reason why we cannot return there so long as we drive the changes which can be needed for improvement,” wrote Tan. “It can be difficult. It would require painful decisions. But we’ll let that it’s what we’ve got to do to raised serve our customers if we construct a brand new intell for the long run – and I actually have great confidence in the ability of our team and our employees to attain this.”
Finally, he thanked the workers for the whole lot they did in the primary quarter. In an analyst call, he found that he had joined five weeks ago. He replaced the intermediate bosses and the previous CEO Pat Gelsinger, who resigned in December 2024.
Tan said his motto was under promise and tradition, and he wouldn’t rest until Intel regained the trust of his customers. Intel said that tariffs will surely influence their business, partly due to caution that it will generate it amongst customers.
