Intel (INTC) stock rose as much as 5.6% on Wednesday after a report from Bloomberg late Tuesday said the chipmaker plans to cut 20% of its workforce.

The report comes just a day before the chipmaker is set to report earnings, which are due out after the bell on Thursday. 

Intel — the only American chip manufacturer capable of producing leading edge semiconductors at scale — has struggled over the past several years to keep up in an increasingly AI-dominated market.

Shares of the iconic yet troubled chipmaker fell roughly 60% in 2024 and have dropped a more modest 2.7% year-to-date, as Intel’s manufacturing division bleeds cash and its product business loses market share to Advanced Micro Devices (AMD).

Intel’s new CEO Lip-Bu Tan had said upon taking the helm last month in a call with employees that there were “hard decisions" ahead for the company, implying that future cuts could be coming. Two current employees in Intel’s manufacturing business previously told Yahoo Finance that staffers were anxious and bracing for layoffs.

Tan hasn’t shared his exact plans for Intel, but he’s publicly acknowledged that Intel “fell behind on innovation” and promised to build out its burgeoning “merchant foundry” business while also catching up to Nvidia (NVDA) in the AI chip design space.

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While Intel has always made its own chips, a merchant foundry manufactures chips for other companies. 

The company launched Intel Foundry Services in 2021 under Tan’s predecessor Pat Gelsinger, who was ousted by the board in December.

After taking the role of CEO in February of 2021, Gelsinger oversaw a hiring spree that saw the company grow 10%. Intel later announced 12,000 job cuts in 2022 and unveiled plans to slash an additional 15,000 staffers in 2024. The chipmaker has also been plagued by turnover at the executive level, as employees leave for rivals like TSMC (TSM) and Nvidia (NVDA) or taking early retirement packages.

Former executives have argued that Intel’s decline — which they contend is the result of poor decision making and missteps made over the course of more than a decade — is partly due to its oversized workforce and the resulting slow decision making and internal politics. 

These execs told Yahoo Finance in March that cutting back middle management would help.

But the two current manufacturing employees said cuts could dampen already-depressed morale and create chaos just as Intel attempts to introduce a highly-anticipated new manufacturing technology, 18A, that could put it ahead of leading contract chip manufacturer TSMC.

Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.

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