Intel Confirms Additional Layoffs in Data Center Unit as Stock Rises on Turnaround
The chipmaker did not disclose how many positions will be cut in its data center and AI group, which posted $5 billion in revenue last quarter, up 22 percent year over year.
Summary:
Intel is reducing jobs within its data center unit as part of a broader restructuring under CEO Lip-Bu Tan. This announcement comes amidst rising stock prices, two days before Intel’s second-quarter earnings report. The cuts contradict the strong performance of the data center and AI division, which has been driven by increased demand for Xeon processors in AI data centers.
Intel attributes the restructuring to "aligning its organization" for long-term success, without providing specific details on job eliminations. A source familiar with the matter states that these changes will not impact product commitments or roadmaps.
The paradox lies in the fact that Intel is downsizing a business unit that is pivotal to its financial recovery. This suggests that Tan prioritizes efficiency over scale in turning around the company. While Intel’s Xeon line has gained significance in AI systems, they still lack a competitive AI accelerator chip to rival Nvidia’s GPUs, leading to significant revenue losses.
Lip-Bu Tan, who assumed leadership in March 2025, has previously initiated substantial job cuts. Intel’s workforce decreased from a peak of nearly 132,000 in 2022 to approximately 83,200 employees last quarter, with expectations to further drop to around 75,000 by the end of the year.
These layoffs align with a broader trend across the tech industry, where companies like Meta and Oracle have also reduced headcount while increasing AI infrastructure spending. The US government, which holds a 10% stake in Intel through CHIPS Act grants, stands to benefit significantly from Intel’s stock surge under Tan’s leadership.
Intel’s earnings report on Thursday will be closely watched, particularly regarding the data center group’s performance. The question remains whether the stock price reflects realistic expectations for future progress or has already anticipated substantial advancements.