Intel Shares Suffer a Steep Decline Today
In a significant move, Intel, the chipmaking giant, has unveiled a major transformation strategy aimed at enhancing agility, simplifying operations, revitalizing its core x86 product lines, and refining its AI strategy, while managing manufacturing investments carefully.
The announcement comes after Intel reported higher-than-expected revenue for its latest quarter, with $12.9 billion compared to the consensus estimate of $11.97. However, the mixed earnings and a disappointing future outlook contributed to a decline in Intel's shares, which have experienced an 8.42% decrease. As of 3:06 p.m. ET, the stock is tumbling, down 9.4%.
The S&P 500 and the Nasdaq Composite gained 0.4% and 0.3%, respectively, while Intel's shares declined. The consensus estimate for the current quarter's guidance is $12.66, but Intel's guidance for the current quarter is better than expected, with a range set between $12.6 billion and $13.66 billion.
CEO Lip-Bu Tan acknowledged that "over the past several years, the company invested too much, too soon -- without adequate demand." In a memo, Tan wrote, "there are no more blank checks." As a result, Intel is planning to abandon its "pursuit of Intel 14A and successor nodes" and its next-generation manufacturing processes.
A key part of Intel's transformation strategy involves organizational restructuring and workforce reduction. The company plans to reduce its workforce by about 15%, targeting around 75,000 employees by the end of 2025 to reduce inefficiencies and make the company more agile, collaborative, and accountable.
Intel also emphasizes strengthening its core client and data center products. For client chips, Panther Lake for notebooks and closing gaps with Nova Lake in high-end desktops are priorities. For data centers, regaining share with Granite Rapids and improving hyperscale workload capabilities are key, including reintroducing simultaneous multithreading (SMT), which Intel previously removed but now sees as critical to competitive performance.
In the AI domain, Intel will concentrate on areas where it believes it can disrupt and differentiate, such as inference and agentic AI. The approach starts with emerging AI workloads and works backward to optimize software, systems, and silicon for customer outcomes. More detailed AI plans will be shared in coming months.
The transition for Intel will be painful, but the company acknowledges the challenges in the foundry business and AI market. Intel commits to continuing development of advanced process nodes like Intel 18A and plans 14A for 2028-2029. However, the company explicitly notes the economic risk if it cannot secure significant external foundry customers for these nodes. This could lead to pausing or discontinuing Intel 14A and beyond, focusing instead on manufacturing most products internally with nodes up to 18A-P through at least 2030.
In light of these changes, Intel aims to "right-size" the company not just to reduce costs but to improve product and process execution in a highly competitive environment. The news raises more questions about Intel's path back to profitability. As part of the cost-cutting measures, Intel will slow construction of a site in Ohio and will not move forward with planned projects in Germany and Poland.
[1] Intel's Q2 2025 Earnings Release: https://www.intel.com/content/www/us/en/investor-relations/earnings-news/q2-2025/q2-2025-earnings-release.html [2] Intel's Q2 2025 Earnings Call Transcript: https://www.seekingalpha.com/symbol/INTC/transcripts/earnings/2025-07-27 [3] Intel's Q2 2025 Earnings Presentation: https://www.intel.com/content/www/us/en/investor-relations/quarterly-results/2025/q2/q2-2025-earnings-presentation.html [4] Intel's Q2 2025 Earnings Supplement: https://www.intel.com/content/www/us/en/investor-relations/quarterly-results/2025/q2/q2-2025-earnings-supplement.html
- Intel's transformation strategy includes a focus on managing manufacturing investments carefully, strengthening its core finance in client and data center products, and refining its AI strategy, which demonstrates a clear interest in technology and investing in areas where it can disrupt and differentiate.
- As part of the cost-cutting measures, Intel will slow construction of a site in Ohio, abandon its pursuit of Intel 14A and successor nodes, and reduce its workforce by about 15%, displaying a commitment to optimizing its technology, finance, and money due to the highly competitive environment.
