Published by Global Banking & Finance Review®
Posted on April 24, 2025
5 min readLast updated: January 24, 2026
Add as preferred source on GoogleIntel forecasts weak Q2 amid trade tensions. CEO Tan plans to revitalize innovation and cut costs, impacting shares and operations.
By Max A. Cherney, Arsheeya Bajwa, Stephen Nellis
(Reuters) -Intel forecast second-quarter revenue and profit below Wall Street estimates on Thursday, casting a shadow over new CEO Lip-Bu Tan's first round of earnings at the helm, against the backdrop of a raging Sino-U.S. trade war.
In a conference call with investors, Tan also gave the first hints of sweeping plans to revitalize Intel's culture of innovation, including a mandate for employees to return to the office four days a week, fewer meetings and stripping out unnecessary internal administrative work in favor of core engineering work.
His remarks appeared to help Intel shares stem losses in extended trading but they were still down 5%.
The chipmaker's dour outlook could be another source of pessimism for investors who are counting on Tan to turn things around after years of missteps have left it struggling to gain a foothold in the booming AI market.
Fears around tariffs pushed customers to stockpile Intel chips, which boosted sales in the first quarter, CFO David Zinsner said. The company was not able to determine the amount of the benefit, and it expects the second quarter to suffer as a result.
"The very fluid trade policies in the U.S. and beyond, as well as regulatory risks, have increased the chance of an economic slowdown with the probability of a recession growing," Zinsner said during a conference call with analysts. "This makes it more difficult to forecast how we will perform for the quarter and for the year."
Despite the mounting tariff concerns, Tan said on the conference call that he met recently with Intel rival Taiwan Semiconductor Manufacturing Co's CEO, C.C. Wei, and former CEO Morris Chang. The purpose, he said, was to find areas of possible collaboration and to "create a win-win situation."
TSMC held its annual U.S. technology day in Santa Clara, California, on Wednesday, which was attended by Tan and Wei.
Amid Tan's attempts to streamline the company and cut costs, Intel also said it is reducing its adjusted operating expense target to approximately $17 billion in 2025, down from its previously stated goal of $17.5 billion, and is now targeting $16 billion in 2026.
Tan said Intel is examining its factory footprint. In February, the company said it was pushing back a $28 billion factory project in Ohio until 2030.
"We will continue to take a closer look at our existing factory footprint to ensure that we are making the most efficient use of our in-store capacity before committing to any additional spending," Tan said on Thursday.
CFO Zinsner said on the call that the company has received $1.1 billion in grants from the U.S. government under the CHIPS Act, but that it was holding its capital expenditure forecast for 2025 steady at $8 billion to $11 billion "due to uncertainty regarding timing of the U.S. government fulfilling their obligations in our CHIPS agreement."
Zinsner said the possible impact of restructuring plans on employee head count was still uncertain, but that clarity would emerge when the company reports second-quarter results.
In a memo to employees published publicly ahead of his first conference call with analysts as CEO, Tan wrote that layoffs would begin in the second quarter and that such changes would focus on reducing the company's internal bureaucracy. Tan also plans to slash the number and size of internal meetings.
""There is no way around the fact that these critical changes will reduce the size of our workforce," Tan wrote. "As I said when I joined, we need to make some very hard decisions to put our company on a solid footing for the future."
Beginning on September 1, Intel will require employees to return to the office four days a week, Tan's memo said.
The company also reduced its gross capital expenditures target to $18 billion for 2025, down from the company's previous target of $20 billion.
The Santa Clara, California-based company expects revenue of $11.2 billion to $12.4 billion for the June quarter, compared with analysts' average estimate of $12.82 billion, according to data compiled by LSEG.
While U.S. President Donald Trump has for now spared chips from tariffs, Beijing's high retaliatory levies on U.S.-made semiconductors cloud the outlook for Intel's sales to China, typically its largest market.
Chips manufactured in the U.S. are set to face levies of 85% or higher, based on the state-backed China Semiconductor Industry Association's notice earlier in April.
China imports $10 billion worth of chips from the United States annually. About $8 billion of these are central processing units (CPUs) assembled by Intel in the U.S., according to Bernstein analysts.
Intel's first-quarter revenue was flat at $12.67 billion. The results beat estimates of $12.30 billion.
The company expects second-quarter per-share adjusted profit to break even, compared with estimates of profit of 6 cents per share.
(Reporting by Arsheeya Bajwa in Bengaluru and Max A. Cherney and Stephen Nellis in San Francisco; Additional reporting by Shanima A in Bengaluru;Editing by Peter Henderson and Matthew Lewis)
The article discusses Intel's weak forecast amid trade tensions and CEO Tan's strategic plans to revitalize the company.
CEO Tan plans to cut costs, streamline operations, and foster innovation to address Intel's challenges.
Trade tensions have led to stockpiling, affecting Intel's sales and financial outlook for the upcoming quarter.
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