Intel's Aggressive Restructuring: 50% Margin Mandate, 20% Layoffs Imminent
Intel's new CEO, Lip-Bu Tan, is implementing aggressive measures to turn the company around. To boost profit margins, Intel will no longer approve new projects that cannot achieve at least a 50% gross margin, leading to project cancellations and engineer reassignments. Simultaneously, Intel plans up to 20% layoffs in Q2 and a streamlining of middle management. The goal is to transform Intel into an engineering-focused company and attract and retain top talent. While this approach seemingly contradicts fostering a culture of innovation, Tan appears to have investor backing. Intel's recent gross margin has plummeted to 31.67%, far below the pre-pandemic level of around 60%, making the success of this transformation uncertain.