Intel layoffs to hit Data Center group — division focused on server CPUs, AI chips, and data center architecture to be hit by an unknown number of cuts

Intel just announced another round of layoffs more than a year after CEO Lip-Bu Tan warned of “tough decisions” required to get the company back on track. This decision has resulted in the reduction of its headcount by more than 35,000 since 2024, when ex-CEO Pat Gelsinger revealed that its data center and foundry divisions have lost $1.6 billion. The latest announcement came months after the last job cuts and is still happening despite the company posting a strong first quarter this year. According to Oregon Live, its share price has more than tripled from a low of $23 per share to more than $96 today, with the data center group reporting sales of $5.1 billion for the first quarter. However, this good performance seems not to have affected the firm’s plan to streamline its operations.

“As part of our broader strategy to become a more focused and efficient company, (the 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,” Intel told the publication in a statement. It also added, “We are committed to treating all impacted employees with respect and providing resources to support them through this transition.” Unfortunately, the company did not say how many positions will be cut and when it is happening — it only assured that the reduction-in-force won’t affect its business commitments and plans to launch new products.

While the AI infrastructure build-out was initially powered by GPUs and memory chips, advancements in agentic AI have greatly increased the demand for CPUs, putting Intel in a good position with its Xeon chips. Aside from that, the company is reporting customer interest, possibly including Apple, for its 18A and 14A nodes. It’s also planning to launch an AI GPU in the latter half of 2026 that will compete against Nvidia’s RTX Pro 5000 GPU.

This is a slow reversal of its misfortunes in the first half of the decade, but it seems that it’s not happening fast enough for its data center group employees who will be affected by the job cuts. It’s quite surprising that Intel plans to gut its Data Center group, which is one of its strongest performers and is in a good position to take advantage of the ongoing AI data center boom. But despite the high demand for AI data centers, it seems that the company still needs to cut its personnel count to streamline its operation.