Intel cutting jobs in fast-growing data center unit
CEO Lip-Bu Tan is extending his restructuring program into one of the company's strongest-performing businesses.
Intel is extending its restructuring into one of its fastest-growing businesses, launching a new round of layoffs in its Data Center and AI Group even as demand for AI infrastructure continues to fuel strong revenue growth.
The latest job cuts underscore the difficult balancing act facing CEO Lip-Bu Tan, who is attempting to rebuild Intel's competitiveness while reducing costs in an industry where investors continue to reward companies that can capitalize on the artificial intelligence boom.
The company, which will announce its earnings later this week, did not disclose how many employees will be affected, but the reductions are expected to reach hundreds of workers globally. The impact on Israel is expected to be limited because the Data Center and AI Group has only a small local presence, with estimates suggesting the cuts will affect only a few dozen employees.
The layoffs come despite strong recent performance from the division. Intel's Data Center and AI Group, which develops server processors, custom AI chips and data center architecture, generated $5.05 billion in first-quarter 2026 revenue, a 22% increase from a year earlier.
Intel said the restructuring is intended to streamline the organization rather than alter its product strategy.
"As part of our broader strategy to become a more focused and efficient company, our Data Center Group is aligning its organization to ensure it has the right roles and skills in place to position the business for long-term success," an Intel spokesperson said. The company added that it remains committed to its product roadmap and will provide support to affected employees.
The latest reductions are another step in the sweeping overhaul launched by Tan after he succeeded Pat Gelsinger as CEO in March 2025. At the time, Tan warned that restoring Intel's competitiveness would require difficult decisions and unveiled plans to reduce the company's global workforce by 15%.
The move comes at a pivotal moment for both Intel and the broader semiconductor industry.
Chipmakers have become the biggest beneficiaries of the AI investment boom, propelling the semiconductor sector far ahead of the broader stock market. Yet the industry's rapid rise has also made it one of Wall Street's most volatile sectors, as investors increasingly question whether demand for AI infrastructure can continue to justify lofty valuations.
