Intel CEO Letter to Employees

I thought about this a lot over the years.

I saw something that piqued my interest last year though, and kind've helped connect the dots. I was on a cruise, and most of the ship was available to guests. One day, one room was cordoned off to an invite-only meeting. The windows weren't blocked, but on the screen was a presentation about AI investments, number of jobs saved (reduced), and etc.

I found one of the attendants later during the voyage and chatted her up. She was head of HR in some big company, and the meeting was supposed to be private. But it contained a lot more than just spreadsheets about AI investments. There was homework and whatnot, but the attendees weren't all from a single company. It was "direction setting". I don't think it was Intel (topic under discussion) but certainly some loosely related tech industry.

I'm convinced that it was nothing less than business collusion.

So, back to your question:

> why do all these business leaders all do the same things at the same time?

Because they're told to.

A sensible, sober CEO would still need a lot of political capital to push back against a boardroom that's hounding them to jump on the latest hype train. You certainly won't get that from a CEO who just took that position a few months ago.

A sensible, sober boardroom that doesn't push their execs to jump on the hype train would need to answer to angry shareholders. It's almost certain that >50% will support the latest fad and would vote out a board that they perceive as being behind the times.

That's where startups and privately owned companies get their natural advantage of being able to go against the grain.

I've pitched that a couple times in my career. The difficulty is that, in a lot of cases, your future business prospects are genuinely correlated with the future prospects of other businesses.

Intel is going to sell fewer CPUs in the next 3 years if other businesses aren't hiring and expanding as quickly as they did during COVID. And I think there's a pretty good reason to think that Intel's revenues will actually shrink as a result.

That limits how much zig they can do while others zag.

Historically Apple has done this - Steve Jobs noted at one point that the absolute last thing they were going to do during a recession was to cut R&D, because that was what was going to let them capitalize once the recession was over.

Left as an exercise for the reader is assessing Apple’s financial performance as relates to the rest of the industry, with extra credit for comparing that to the ongoing guidance from the finance industry set.

    Is this truly about macroeconomic forces that every business is responding to? Or is it just following the latest fad?

Just like any bubble bursting, that is the best time for any well-positioned company to invest in that market. The problem with Intel is that they are far from well positioned. AMD and nVidia each have about a quarter of the employees that Intel has and TSMC has about half. Intel over-invested in employment so the over-employment bubble bursting will hit them hard. Their best bet is to refocus their current employees, but they might not be the right mix, so they may need to have even larger layoffs, while simultaneously highering new employees in pertinent fields.

You'll find the same names appearing over and over again.

The reason all companies seem to do the same thing at the same time is that their boards are all the same people giving the same order to all their companies' ceo's at the same time.

But there are CEOs who define an industry. Those are not easily swayed by big capital.

Most hired executives play not to lose rather than playing to win; the nature of their compensation packages incentivizes it, where big wins accrue largely to diffuse shareholders while big losses mean they lose their fat executive pay package. It takes a founder-CEO to play to win, but if the hired CEO had that skillset and that inclination, they'd be a founder rather than a CEO.

Most of these businesses are feeling the same pressures and experiencing the same problems... in silence. Eventually one of their competitors breaks (because they are forced to due to economic realities, etc) and starts making necessary moves (layoffs, efficiency improvements, etc). The rest follow-suit, breathing a collective sigh of relief that they weren't the first to make all the headlines.

AI was a wonderful scapegoat. If it wasn't AI it'd be the economy or some other excuse. No one wants to admit mismanagement and overspending, but of course a business is going to take advantage of a discount. It's just a shame that wasn't a discount on property or hardware, it was on people.

Some other smaller companies are swept up in this because they follow moves from the larger companies. Everyone is trying to copy the leader, right? Everyone is asking "what's that big successful company do? That's what we need to do." So you have this absolutely horrible job hiring process in tech too as a result of that. You have excess and toxicity because people are trying to make something work that doesn't make sense for their business.

What do you think the whole $100 million bonuses for these AI people (which so far have been rumors) is going to do? It'll cause idiots elsewhere to go overpay and over hire because of FOMO...and once again more layoffs in the future.

And on and on we have these cycles.

But speaking of combining forces, Microsoft will be more likely to pick them up in a fire sale now, which I think would be best for all involved. Then you’re a couple of M&As away with first Dell and then Oracle.

Then they will select a champion to fight the Pentavirate at The Meadows!!

I think they should do what you say but shareholders are looking for the quickest, best returns now, not in a few years time.

Looking at Andy Grove's wikpedia page it could be that the above reflects his focus on "strategic inflection points"

So Intel used to do it once, but now, not so much

They're just trying to get the job done and copying your partner's homework can save time, even if your partner didn't get the right answer or also just copied their partner.

CEOs, on average, don't know what they're doing any more than anyone in most other professions. They just happen to be born part of the ruling class.

Broadly speaking though, I think you’re experiencing confirmation bias to some degree. If you only look at companies that are on the struggle bus, then you only see a limited number of levers that management has (RIF, delay CapEx, etc). Other struggling companies that don’t take evasive maneuvers go out of business and we don’t hear the story.

I think there's a lot of "monkey see, monkey do" going on in the corporate world.

Also, shareholders and all that.

Intel doesn't have a meme-stock/vibe-stock thing going on at the moment (think Elon and getting to Mars by 2030, or robotaxis everywhere by the end of 2025 etc).

So I guess downsizing seems to be the only potential appeal for them right now.

Disclaimer: I know nothing

Particularly in tech and tech adjacent, there's a belief that doing what everyone else is doing is safe. It's the "nobody ever got fired for buying IBM" approach but for corporate decision making.

If other companies return to office, you return to office. They're successful, so they must have good reasons - no need to investigate or come up with your own reasons. If other companies eliminate QA, you eliminate QA.

Most tech companies are just following what the big dogs are doing, but worse and stupider. When it backfires, nobody cares.

Eventually some companies will start scooping talent up, and everybody will zig :)

The problem is that multiple layoffs are terrible for morale and basically obliterate the motivation and mood of the remaining workers.

Reorgs are another common pattern of incompetent management that introduce chaos without bringing net positive value.

This is similar shit that happened in the '80's, '90's, and '00s and was captured culturally by Dilbert and Office Space.

Those who ignore the lessons of the past will make history rhyme once again.

It's the companies with no ideas who have to cut costs.

imagine this approach fails and you have to go to your board? They’re going to flat you alive and call you an idiot who should’ve done what everyone else was doing since it was obvious

but if you do what everyone else is doing? Well the macro changed obviously!

EDIT: I’ve worked at big tech companies where this was a meme, where the execs would do whatever meta/google did but six months later

So the "market" demands sacrifice basically and there is cover when everyone else is doing it. You can be contrarian but your stock may get punished. Intel may not have a good plan anyway. The reason the market demands sacrifice is likely because of predicted unfavorable economic headwinds (etc... so signs of recession or what not). These predictions could be wrong though. Companies do constantly realign though, product initiatives fail etc...

Conspiracy theory: business leaders don't do as much as they should, so they imitate each others moves to justify their existence on the position. With a side effect of cluelessly influencing lives of thousands, but that's a repeated scheme in the overall history of civilization

What would you do when you're bleeding money?

American markets have largely consolidated into oligopolies, where just a handful of very large companies operate. It's extremely easy for them to wink at each other and then raise prices/layoff workers, etc.

This is also being accelerated by the unregulated software market that lets the corporations hide behind algorithms, as we recently saw with realty. https://www.npr.org/2024/08/23/nx-s1-5087586/realpage-rent-l...

The end of ZIRP was the bat signal to corporate America to begin layoffs.

Because they all studied the same MBA programs.

Now why all the countries start just warring and killing all at the same time... now that is weird. I guess the best bet is same people who own all the business, stop paying all the bribes at once or something and all the power people go nuts

Prior to this, they could just get low interest loans to do whatever financial engineering they wanted to demonstrate growth and get their bag. That is over, now the only way to get the bag is firing people.

So, it's not just that they're all in a capitalist polycule, but is is that they all just live in the same bubble of irrational short term reasoning.

Simple. These companies need enough 'fitness' in order to survive and thrive. No one has the power to fight against the Nature’s Wille—survival of the fittest. They have to obey, especially when faced with the ruthless, life-and-death competition of the commercial world.

P.S. Hoping this comment doesn’t get downvoted too much and end up dead, not surviving.

The issues with MBAs and bean counters are that they rarely have intuition about which is which, and only investing in areas a company is already successful in is rarely a winning long term strategy.

Agree with the first sentence, strongly disagree with the second.

Intel's problems over the past 15 or so years certainly wasn't that they had cut away all the "fat" and then into the "muscle and bone". It was they had gotten too fat and directionless. Indeed, one of the quotes from the letter regarding their foundry business is that they invested in the wrong things: "Over the past several years, the company invested too much, too soon – without adequate demand. In the process, our factory footprint became needlessly fragmented and underutilized. We must correct our course." If they had ruthlessly prioritized before (which may have included getting rid of ill-fated initiatives earlier) they would most likely be in a better position today.

This is a very tiring narrative. People keep complaining about Paul Ottelini missing the iPhone, but his performance at Intel was better than the next 3 CEOs, 2 of which were engineers with roots at Intel.

Google CEO is a McKinsey guy.

Intel is in trouble, it's not clear how or if they'll be able to get out of the hole they're in. Their only saving grace is natsec concerns and even that may not be enough to save them. I was hoping Gelsinger would be able to do it, but it was too late.

  You can tell from the tone of this letter and the bizarre reference to agenetic AI he is completely clueless.

For those of us who cannot tell, what are the clues?

Even in this letter he says he's going to be reviewing major chip designs before tape out. JFC...

Not sure if you intentionally picked the all time high headcount, but you did.

Intel's headcount was relatively stable between 100-110k people between 2014 and 2021 [0]. So, getting down to 75k is definitely still a major reduction, but 2022 was also an outlier. A lot of companies overhired during Covid, and Intel particularly was the beneficiary of WFH pulling in a lot of corporate spending on laptops etc.

[0] https://morethanmoore.substack.com/p/intel-2025-q1-financial...

1: https://www.threads.com/@masiosare/post/C-SoS6qJbU6?hl=en

Imagine doing what all your competitors are doing while being one of the least desirable big tech companies to work for.

What could possibly go wrong? /s

I bought INTC to hold for 10-20 years based on the promise of long term investment in domestic manufacturing. I didn't care if they took a decade to battle back. Seeing them sell of the foundry business would be enough for me to cut my losses before the titanic hits the ocean floor. They'd be a walking corpse at that point IMO.

He said only that they will attempt to squeeze more money from the existing Granite Rapids, which uses CPU cores that are obsolete in comparison with AMD Zen 5 and in comparison with Intel's own CPU cores from consumer products.

The emphasis for future products has shifted mainly on laptops (Panther Lake) and less importantly on desktops (Nova Lake).

It is true that lately the only profitable division of Intel has been the one selling "client" CPUs, mainly for laptops, but instead of making any attempt to revitalize the other divisions it seems that the new CEO only wants to abandon those markets.

I do not care much about Intel CPUs, because they did not show anything interesting on their public roadmap, but I would have been interested to see better GPUs. I have recently bought an Arc B580, for the reason that while all the other vendors have reduced their FP64 performance, Intel has increased it, matching or exceeding in performance per dollar the GPUs that could still be bought 5 years ago (like Radeon VII) for which no replacement has existed at other vendors.

But the main reason to focus on x86 is that it has 47 years of existing software built for it, and with the high end mostly still on it, more gets made every day.

RISC-V is inevitable.

Intel will simply miss the train, and go under.

Unlike Intel, AMD isn't clueless. After Zen6, it will likely release good RISC-V chips with some sort of x86 acceleration for unprivileged code as selling point, remaining relevant and securing themselves market share during the (inevitable) transition.

So for such a statement to be coming from the new Intel CEO could indicate a radical turnaround in Intel's approach to processor development. Or, alternatively, maybe he just hasn't met the company yet.

In theory this this sounds great. Based on the descriptions I've heard of how Intel works internally, my confidence in this happening is about 0.12%.

A small startup can just go bankrupt if it fails, but in a big company (like Intel) there can be more collateral damage

I don't even know who my boss actually is now.

> we plan to end the year with a global workforce of about 75,000 employees as a result of workforce reductions and attrition

so it looks like the explicit reduction might be lower, but accounting for people leaving on their own, the final amount of employees should be ~75k

This is a company that declined to supply chips for the iPhone because they didn't think the margins would be good enough. Consider how much that one decision has favored competitors. And that's just one bad decision of countless.

As the excellent series Chernobyl put it (in the words crafted by a writer, not an actual scientist) "Every lie we tell incurs a debt to the truth" and at some point someone is going to have to pay all of those debts.

1: Here I'm focusing on Anglosphere/largely US and UK societies, as a monolingual American that's all I can effectively comment on.

2: 'this will make you more productive/more efficient/more creative' whatever

I’d also hoped that some major semiconductor company would NOT embrace AI, just so they could differentiate themselves: “Our shit may be too slow for the Terminator to use, but it was designed by and for humans to use as air-gapped spreadsheet running machines with USB-key sneakernet email.”

Given that there is a growing backlash towards LLMs by the general public (not just one writers’ guild), that might sell some stock.

Each time, the CEO would give tons of small, random suggestions, then disappear for several days before reviewing again. He'd request more tweaks, then repeat the cycle. Because of all this back and forth, even simple tasks that should've taken a couple of days ended up dragging on for a month.

In the end, my friend got so frustrated with the whole process that he just quit.

> We will become a faster, more agile and more vibrant company. We will eliminate bureaucracy and empower engineers to innovate with greater speed and focus.

It really is a weird PR piece rather than serious communication.

So, he's going to wait until the tape out stage of a major new chip design before he reviews it? Bold move.

Given the number of “major” chips Intel produces-weren’t they already being presented to the C-Suite? What stealth chips were being sold without high level involvement?

And besides I think you can probably guess that AI is probably the most hardware oriented the industry has been in decades

It _is_ a hype bubble but it is also an S-curve. Intel has missed the AI boat so far, if they are trying to catch up, I would encourage them to try. Building marginally better x86 chips might not cut it anymore.

software tools are essential to driving chip adoption; it's one reason why Nvidia got ahead (CUDA)

But to be serious: Intel creates software too (compilers for example). Nvidia does provide software too. Its also nice to sell licenses.

[0] https://www.gov.pl/web/cyfryzacja/inwestycja-intela-w-polsce...

Granted, ISA is less crucial than it used to be, but there's still a lot of x86 binaries in the world.

[1] https://community.intel.com/t5/Graphics/Very-poor-Linux-supp...

Disclaimer: I own a netbook and spent a very long time researching getting it to work with Linux

Aren't layoffs a version of that? Are we seeing any evidence that folks who have been let go from Intel have resulted in spin-offs and startups?

I know at least one person who went to work at Nvidia from Intel but that is neither of those things.

- Allow industry to consolidate to a tiny group of winners, or just one winner

- Turn a blind eye to anticompetitive behavior in the marketplace

- Protect the uncompetitive winner from innovative global competitors

- Bail it out because national security depends on it

It's funny because we don't have socialism, government doesn't 'own' heavy industries, but at the same time the major firms will obviously never be allowed to fail on national security grounds.

It's like Coinbase pointing out the customers may not be able to withdraw their cash. Public companies are required by law to make statements like these.

Intel spent $2B on Habana and it went nowhere. Too bad, the hardware seemed promising enough.

when did they get bailed out before? And don't say CHIPS because Intel only actually received $2B to build fabs - and that's only a tenth of the cost of building its new fab in Ohio. That's not a bailout.

So far as the firings concentrate on all the ancillary stuff that Intel shouldn't have gotten into in the first place, it's positive.