Layoffs Suddenly Announced Before Earnings Report, Intel (INTC.US) Cuts Costs and Increases Efficiency in the Hottest Data Center Division

According to Zhitong Finance APP, chip giant Intel (INTC.US) has launched another round of cost optimization actions. On Monday, Intel officially informed employees of its Data Center business unit that the company plans a new round of layoffs for this division. After major cuts in 2024 and 2025, Intel is once again wielding the “layoff blade.”

Regarding this round of layoffs, Intel released an official statement: "As part of our broader strategy to become a more focused and efficient company, the (Data Center unit) is adjusting its organizational structure to ensure it has the right roles and skills, laying the foundation for long-term business success."

The company stated that this restructuring is expected to make operations simpler and more agile. It emphasized that the layoffs would not impact its commitment to products or its established development roadmap. The statement also promised to respect all affected employees and provide them with the necessary support and resources during the transition period.

Somewhat paradoxically, the Data Center and Artificial Intelligence (AI) division, which is being targeted in this round, has been the main engine behind Intel’s recent business recovery. Financial data shows that in the first quarter of 2026, this division generated revenue of about $5.05 billion, a 22% year-on-year surge.

Intel is scheduled to announce its second-quarter earnings after the U.S. market closes this Thursday (July 23). Market expectations are quite optimistic. Analysts generally expect Intel’s adjusted earnings per share to reach $0.22 with revenue of $14.45 billion—a significant reversal from a per-share loss of $0.10 and revenue of $12.86 billion in the same period last year.

Nearly 40% Workforce Reduction in Four Years, Management Tiers Sharply Streamlined

This round of layoffs continues Intel’s long-term “slimming plan.” After current CEO Lidu Chen succeeded Pat Gelsinger in March 2025, he implemented a global layoff plan targeting 15% of employees. So far, over 5,000 U.S.-based employees have been laid off, mainly in California, Oregon, Arizona, and Texas, with most of the cuts completed in 2025.

Over a longer timeline, Intel’s global workforce has shrunk from nearly 132,000 in 2022 to about 81,000 now—a reduction of nearly 40% in four years. This figure includes both direct layoffs and staff loss due to spun-off businesses.

Lidu Chen previously made it clear that Intel needs to reduce management layers, allowing the company to make decisions faster and accelerate new technology development.

Despite constant layoff news, Wall Street seems to support Intel’s reform path. Over the past year, Intel’s share price surged from around $23, accumulating a gain of more than 300%. Although the stock is now below the peak of $142 briefly reached last month, it remains at a high level. Investors widely bet that AI systems will drive massive demand for Intel microprocessors, and anticipate that Apple (AAPL.US) and other large tech companies will outsource chip manufacturing orders to Intel in the future. Reports indicate Intel has secured 18A and 14A design orders from leading companies including AMD (AMD.US), Nvidia (NVDA.US), Microsoft (MSFT.US), Micron (MU.US), OpenAI, Meta (META.US), and others.

However, amid this capital market fervor, regional industrial pains cannot be ignored. As Intel’s largest manufacturing base, Oregon has been hit particularly hard. The company's employee count there has dropped from about 23,000 in 2024 to around 16,000 now, pushing the state’s semiconductor workforce to its lowest point in 30 years. A new report commissioned by Oregon’s economic development agency even warns that, unless the state works to foster new companies and build robust talent pipelines, Oregon’s position in the global semiconductor industry may become "inconsequential."

Expanding the view to the whole sector, the “cost reduction and efficiency improvement” wave in tech is far from over. According to Layoffs.fyi, a layoff tracking organization, the tech industry has seen 121,326 layoffs so far in 2026, a figure already approaching the total for all of 2025 (122,606). Clearly, as the AI era unfolds, both giants and startups continue to endure the painful restructuring of the industry.