Intel Announces New Cost-Cutting Round, Restructures Data Center Group Amid AI Demand

Intel's stock surged 8.6% on Wall Street after the company confirmed a new round of layoffs aimed at reducing costs and reorganizing its Data Center Group (DCG). This division is crucial as it develops Xeon CPUs, which are increasingly in demand for AI model deployment, competing with Nvidia's AI processors. The layoffs are expected to be relatively small compared to previous rounds, reflecting a strategic refresh rather than a broad downsizing.

Despite the challenges Intel faces in developing competitive GPUs for AI training, the company emphasizes that its roadmap, product commitments, and priorities remain unchanged. Intel highlighted that the restructuring is intended to align the organization with the right roles and skills to operate more efficiently and swiftly. The Data Center Group continues to be a core part of Intel's business, supporting cloud infrastructure, artificial intelligence, and enterprise computing.

Intel's workforce has already shrunk by 36% since its peak in 2022, with 83,200 employees reported at the end of Q2. However, this latest cutback is expected to have minimal impact on Intel's Israeli operations, which focus mainly on PC chip development and are currently expanding, with over 60 job openings locally. Intel stated that the changes in the Data Center Group will not affect its ongoing commitments or product development in Israel.