Targetting 50% gross margins, Intel clamps down on low-profit projects, trims workforce to reclaim chip industry dominance.
Intel has introduced a strict profit threshold for new projects under the leadership of its new CEO, Lip-Bu Tan, in a bid to reverse declining financial performance. According to Tom’s Hardware, Intel will no longer approve projects that cannot demonstrate a projected gross margin of at least 50%.
Michelle Johnston Holthaus, CEO of Intel Products, confirmed that projects falling short of this benchmark will not receive engineering support or move forward. While this does not mean all divisions must reach 50%, Holthaus said it remains a clear internal goal.
Key upcoming products, including Panther Lake and Nova Lake, are reportedly on track to meet the margin target.
As per a report by TrendForce, Tan, described as ‘laser-focused’ on improving profitability, is also reviewing existing business deals. Unprofitable agreements may be cancelled or restructured to support this margin recovery plan.
The decision comes after Intel’s gross margin dropped to 36.9% in Q1 2025, a steep fall from the near 60% it maintained consistently for a decade before the pandemic.
Tan’s strategy also includes major workforce reductions. Following last year’s layoff of 15,000 staff, Intel plans to cut an additional 20% of its workforce, according to Bloomberg. The move aims to streamline operations and prioritise core engineering functions.
Despite internal restructuring, Intel’s 18A chip manufacturing process is gaining traction. It is currently in risk production and expected to scale later in 2025. Major firms, including Microsoft, are reportedly engaging in significant foundry deals. NVIDIA is also said to be evaluating the process for future gaming GPUs, while talks with Google are ongoing.
