This is the strange reason behind the mass layoff of 21,000 employees at Intel

New reporting from Bloomberg suggests that Intel could announce 21,000 layoffs in the coming weeks. This most recent wave of firings follows those announced by the company in August 2024, when 15,000 employees were laid off.

As of December 2023, the computing giant reported to the SEC that their workforce stood at 124,800. If carried out, these layoffs would reduce the workforce to 88,800—a 28 percent decrease in under two years.

Intel is under new leadership with Lip-Bu Tan taking over as CEO in March, and these job cuts are said to form part of a new strategy for the chipmaker, which keeps the door open to workforce expansions in the coming years.

As for why the chipmaker is looking to cut its workforce by 20 percent in the coming weeks, leaders pointed to a desire to “streamline management and rebuild an engineering-driven culture.” In other words, the company may be looking to reduce the size of its managerial class, which likely accounts for a sizable portion of Intel’s labor costs, and the new leadership might believe that this investment could be better allocated to other areas of the company.

Financial troubles and lackluster financial benefits from AI

The August press release where the 15,000 initial layoffs were announced, stated that the workforce reduction formed part of a strategy to cut costs by $10 billion by the end of 2025.

“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” said company leaders. Additionally, executives pointed to the fact that they had not seen revenue “grow as expected,” citing examples such as AI, which they hope will bring financial benefits in the future that have yet to materialize.

Sectoral tariffs could create financial challenges for Intel

Leaders hoped that reducing labor costs would increase the company’s margins, which were described as “too low.” The White House provided some relief to Intel and its competitors by exempting products like chips from the 145 percent tariffs that have been imposed on imports from China. However, President Trump has made clear that he intends to place tariffs on electronics in the coming weeks or months. Reports from Bloomberg suggest that further job cuts may be on the horizon, indicating that the financial troubles described last year may be worsening.

Compared to the price a year ago, Intel’s stock is down 40 percent.

Intel will release its first-quarter earnings report for 2025 on Thursday, April 24.

According to the Bureau of Labor Statistics (BLS), 79,000 workers in the Information sector had been laid off in the first two months of the year, compared to 45,000 in 2024. These figures do not reflect the added pressure that tariffs have put on businesses reliant on imports from China and other key trading partners. Looking at the economy with a wider lens, we see that layoffs as of February were up in 2025 compared to last year, reaching 3.46 million, up from 3.37 million.

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