Intel will not be entertaining any projects that do not promise to double its money going forward. Michelle Johnston Holthaus, CEO of Intel Products, announced at Bank of America's global technology conference that Intel is no longer approving new projects that cannot be proven to earn at least 50% gross margin "based on a set of industry expectations."
Holthaus explained Intel's new risk-averse policy as "something that we probably should have had before, but we have it now so that product doesn’t move forward; you actually don’t get engineers assigned to it if it’s not 50% or higher gross margins moving forward."
Holthaus also clarified that while Intel is not expecting or projecting 50% gross margins across all operations, it is a number the company is aspiring toward internally. All of Intel's future roadmap operations, including Panther Lake and Nova Lake, are also currently expected to reach the 50% gross profit number that the rest of the business aspires to.
The drive behind this initiative is reportedly coming from Intel's new CEO, Lip-Bu Tan. Tan is reportedly "laser focused on the fact that we need to get our gross margins back up above 50%." To accomplish this, Tan is also said to be investigating and potentially cancelling or changing unprofitable deals with other companies.
Intel's margins have slipped to new lows for the company in recent months. MacroTrends reports Intel's trailing 12 months gross margin for Q1 2025 was as low as 31.67%. Intel's gross margins had hovered around the 60% mark for the ten years leading up to the COVID-19 pandemic, falling beneath 50% in Q2 2022 and continuing to steadily fall ever since.
Holthaus predicts a "tug-of-war" to ensue within Intel in the coming months as engineers and executives reckon with being forced between a rock and a hard place. "We need to be building products that... fit the right competitive landscape and requirements of our customers, but also have the right cost structure in place. It really requires us to do both."
CEO Lip-Bu Tan has done much to streamline Intel's operation and right a rocking ship inherited from previous Intel chief Pat Gelsinger. Another major round of layoffs, potentially up to 20% of the remaining workforce, is coming in Q2, arriving after a major leadership change-up to remove middle management between Tan and other team leads.
Tan is also quoted as wanting to turn Intel into an "engineering-focused company" again under his leadership. To reach this, Tan has committed to investing in recruiting and retaining top talent; "I believe Intel has lost some of this talent over the years; I want to create a culture of innovation empowerment." Maintaining a culture of empowering innovation and top talent seems, on its face, at odds with layoffs and a lock on projects not projected to gross 50% margins, but Tan seemingly has Intel investors on his side in these pursuits.
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