Tech companies are increasingly focused on investing in AI and cutting down on costs, and to do so, many are restructuring their organizations to boost efficiency. In the chip manufacturing industry, Intel has lately been falling behind its rivals such as IBM, Nvidia, and Samsung. While there could be several reasons for the current dynamics in the market, it seems like the company's delay in advancing in chip fabrication technology is mainly leading to the gap. This lag has also been reflected in the company's financial performance, as it suffered financial losses during Q1 2025. Amidst the recent struggles, the chip manufacturer is determined to transform its operations, even if that means shrinking its workforce.
Intel plans to lay off more than 5,000 employees in the U.S., amid the ongoing struggles the company has been facing
The chip manufacturing industry is seeing intense competition from the big players, advancing rapidly in terms of scale, reliability, and technological leaps. Intel, however, has been behind in AI chips and foundry services due to its delay in growing chip fabrication technology. TSMC and Samsung have been leading with their ability to produce cutting-edge 3nm chips. There has been a delay in the company's product launches, making it fall short in both the consumer and enterprise markets. Intel's AI strategy has also failed to keep pace with raw performance and ecosystem traction, resulting in Nvidia dominating the AI chip market.
Intel's inability to be agile and adapt to the ongoing market trends by upgrading its chip manufacturing process is what led to the company suffering a net income loss of approximately $887 million and a 3 percent decline in the YoY product revenues during Q1 2025. Amidst the recent challenges, the company's CEO, Lip Bu Tan, during an earnings call in April, gave its team a heads up about changing the operations with plans to eliminate organizational complexity. After the announcement, we saw Intel lay off its staff members and revealed that more job cuts would follow.
Intel's CEO is aware that it is no longer one of the top 10 semiconductor companies, and as the company grapples with the harsh realties, it is ramping up for mass layoffs in the U.S. According to the recent Worker Adjustment and Retraining Notification (WARN) filings, Intel is set to lay off more than 5,500 of its employees across U.S., and the major areas that would be impacted are California and Oregon. The number is far higher than what is anticipated, as the company intends to cut 1,935 jobs in California and 2,932 jobs in Oregon. About 696 positions would be cut in Arizona as well.
Intel is not the only company looking into restructuring and experiencing significant layoffs. Other tech giants are also undergoing major changes to help refocus and cut down on costs. Microsoft, Google, and Meta followed a similar strategy of investing heavily in artificial intelligence.
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