“Fears of layoffs have resurfaced”: Intel’s Israeli workforce shaken by stock collapse and factory disaster
Intel’s 30% share-price plunge wiped about $110 billion off its market value, while a deadly explosion at its Kiryat Gat plant claimed the lives of two employees. The company says the stock decline reflects weaker PC-market expectations, not the factory accident, but workers say concerns about job security have returned.
“We are in a state of uncertainty. We thought we had already moved past the difficult period and that Intel was beginning to grow again. But then, one after another, came the disaster of the explosion at the Kiryat Gat plant, which claimed the lives of two employees, followed by a massive plunge in the stock price over the weekend.”
That is how an employee at Intel Israel’s sprawling complex in Kiryat Gat described the mood at the company on Sunday.
The international chipmaker is the largest employer in Israel’s high-tech sector, with approximately 8,000 employees in the country. It has not been immune to the dramatic upheavals now confronting the business. On Friday, Intel shares plunged 30% on Wall Street, marking the company’s worst trading day since 1974. The sell-off wiped approximately $110 billion off its market capitalization, which now stands at around $347 billion.
The decline followed Thursday’s earnings report in which Intel lowered its outlook, citing conditions in the global chip market and production bottlenecks. The company had invested in expanding its manufacturing capacity to meet surging demand for chips used in data centers. But the boom in demand for computing power, driven by the artificial intelligence industry, has also contributed to rising component costs, including memory. Higher PC prices have, in turn, weighed on consumer demand and added pressure to Intel’s business.
Sources at Intel Israel said on Sunday that the share-price decline was driven primarily by the company’s lower-than-expected revenue forecast for the fourth quarter, which they attributed in part to weakening PC sales. They stressed that the market reaction was unrelated to the accident at Fab 28, Intel’s chip manufacturing facility in Kiryat Gat, which occurred approximately two weeks ago. After a two-week shutdown of the affected production line, operations at the facility were resuming in full on Sunday.
Nevertheless, the accident, which killed Ilya Chechulin, 49, and Yakir Kosashvili, 35, and left three others seriously injured, is expected to have a significant financial impact. According to Intel CFO David Zinsner, the explosion is expected to reduce fourth-quarter revenue by approximately $300 million and gross margin by about two percentage points. The incident has also affected the company’s inventory of chips intended for cloud-computing customers.
Fab 28 primarily manufactures 10-nanometer chips for server farms, or data centers. Police, fire services and specialized hazardous-materials teams that examined the site determined that the explosion was caused by a technical failure during the connection of a truck to gas tanks. The subsequent fire involved nitrogen trifluoride (NF₃), a gas that is non-flammable but toxic and hazardous if inhaled.
The incident was highly unusual, and the causes of the malfunction remain under investigation. Given the sensitive raw materials used in semiconductor manufacturing, Intel’s production facilities operate under some of the strictest safety standards in the world. One employee described the uncertainty that followed the explosion: “They wouldn't let us leave the plant to go home until the evening, for fear that people might be harmed by the hazardous materials. I received dozens of phone calls and WhatsApp messages from family and friends checking to see if I was okay. I had to calm everyone down.”
The latest setbacks come at a particularly difficult moment for Intel. In recent months, the company had appeared to be getting back on track under the leadership of its new CEO, Lip-Bu Tan. The U.S. government acquired a 10% stake in the company, while Nvidia also made a significant investment, helping fuel hopes that Intel was beginning to turn a corner.
But that optimism has given way to renewed anxiety among employees. “While it’s not exactly a gloomy atmosphere, concerns about the future have resurfaced, and, naturally, so have fears regarding layoffs,” said an Intel Israel employee who requested anonymity.
Another employee noted that staff had grown accustomed to the company’s ups and downs and the uncertainty surrounding its stock. “Ultimately, the atmosphere remains positive, and we believe things will return to how they were,” the employee said.
In recent years, Intel Israel has undergone several rounds of layoffs. Between late 2024 and early 2025, approximately 1,000 employees were let go, with another round of cuts beginning in April 2025. In July 2025, the restructuring reached Kiryat Gat for the first time. Up to 200 employees, primarily mid-level managers and technicians at the plant’s Remote Operations Center (ROC), were summoned to hearings in a move linked to the introduction of automation systems at the facility.
Those laid off received severance packages averaging eight to 10 months’ salary, with long-serving employees receiving as much as 19 months’ pay. In July 2026, Intel initiated a more limited round of cuts within its Data Center Group. The impact on Israel was negligible, however, as most local development activity was concentrated in the personal-computer chip segment.
Despite the sharp decline in its shares, some analysts in the U.S. have argued that the market reaction was excessive. While the PC market remains weak, demand for server chips is rising, and revenue from Intel’s Data Center and AI division grew by nearly 80% year over year. The company has also recently ramped up its manufacturing operations.
Its new processors, including Panther Lake, which was developed in Israel, already account for nearly a third of its consumer processor revenue, up from less than 5% at the beginning of the year. Meanwhile, Intel’s specialized chips division has tripled in size over the past three years.
In response, Intel said: “Past experience shows that one should not draw hasty conclusions about the company's status based on fluctuations that reflect market sentiment at any given moment. Recent results point to positive trends: in the third quarter, Intel recorded revenue of $16.5 billion, beating forecasts for the eighth consecutive time, while the Data Center and AI division grew by 78%. The stock's reaction stems from the fourth-quarter outlook, which is primarily influenced by a slowdown in the PC market resulting from an industry-wide memory crisis. Intel CFO David Zinsner explained to analysts that the incident at the Kiryat Gat site is expected to impact fourth-quarter revenue by approximately $300 million and the gross margin by about 2 percentage points; he also noted that production at Fab 28 is resuming. These are specific, temporary challenges that do not alter the company's overall trajectory. As CEO Lip-Bu Tan noted during the call with analysts, over the past year and a half, Intel has already implemented significant adjustments to its workforce structure, reducing middle management layers and bureaucracy, and established an almost entirely new management team.”
