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Intel plans to slash its capital expenditures and eliminate managers as the US chipmaker plots a turnaround under its new chief executive and contends with President Donald Trump’s trade war with China.
The company, which cut 15,000 jobs in the second half of 2024, on Thursday said its plan included “streamlining the organisation, eliminating management layers and enabling faster decision-making”.
But Intel gave a more downbeat guide on the current quarter — sending its shares lower in after-hours trading — as the Trump administration’s sweeping tariff plans send shockwaves through the semiconductor industry.
The California-based chipmaker and designer said it expected adjusted revenue of $11.2bn to $12.4bn for the three months to the end of June, lower than analysts’ expectations of $12.9bn, according to Bloomberg estimates.
The shares were down more than 5 per cent in after-hours trading following the release.
Intel’s earnings report was the first since Lip-Bu Tan took over as chief executive in March, after the board ousted Pat Gelsinger in December.
The latest cuts follow months of financial woes for the chipmaker, which has fallen behind Taiwan’s TSMC in the race to manufacture leading-edge semiconductors and struggled to open a business building chips for competitors — a process started under Gelsinger.
Competitors have also threatened its position in the PC chip space while it has failed to capture a meaningful share of the AI data centre chip market, where Nvidia has dominated.
Investors have broadly welcomed Tan’s appointment as a sign of a new strategic direction for the company. Last month he promised “cultural change” at Intel. He has held off on discussing any potential sale of the company’s lossmaking manufacturing business, which some investors have called for.
After the results were announced, Tan revealed the company has reversed course on spinning off its venture capital arm, which was announced in January before his appointment.
“We have made the decision not to spin off Intel Capital but to work with the team to monetise our existing portfolio,” he said, adding they would be “more selective on new investments”.
In an email to Intel employees on Thursday, the new CEO said “unnecessary bureaucracy” was slowing down critical engineering efforts. “There is no way around the fact that these critical changes will reduce the size of our workforce,” he wrote.
He said the cuts would begin during the current quarter and move “as quickly as possible” over the coming months.
Tan also said the company would be enforcing a return-to-work policy, requiring four days a week on site by September 1.
Intel said it was not including restructuring charges in its guidance.
For 2025, Intel said it was revising down its previous operational expenses targets from $17.5bn to $17bn, and cutting $2bn from its earlier capex target of $20bn.
For the first three months of 2025, Intel reported adjusted revenue of $12.7bn, flat from a year ago but above Wall Street’s consensus estimates of $12.3bn. Its net loss widened to $821mn from a loss of $381mn a year ago but was better than analysts expected.
Trump has spared semiconductors and related products from the brunt of his tariff regime on China. But they are subject to a national security review that could lead to further tariffs and more disruption to the highly complex, global semiconductor supply chain.
Washington has cracked down US companies’ exports of artificial intelligence chips to China, as it seeks to exert pressure on Beijing and protect American technology.
Trump’s hostility towards the billions of dollars in subsidies for chipmakers including Intel, TSMC and Samsung, agreed under Joe Biden’s administration and aimed at bringing chipmaking back to the US, has also created uncertainty around the programme.
At the time of its January earnings report, Intel had received some $2.2bn of the $7.9bn in federal grants allocated to it under the 2022 Chips Act.
Chief financial officer David Zinsner on Thursday said Intel’s net capex for 2025 would be between $8bn and $11bn, with the broad range stemming from the “uncertainty regarding timing of the US government fulfilling their obligations in our chips agreement”.
