Intel is preparing for a difficult second quarter, warning that revenue could fall between $11.2 billion and $12.4 billion. This would represent a year over year decline of up to 12%. The company points to global economic uncertainty, inflation, and the risk of new tariffs as major concerns. CFO David Zinsner noted that the strong performance in the first quarter may have been driven by customers ordering early to avoid possible tariff impacts. He warned that the rest of the year could be unpredictable depending on how global trade policies develop.
For the first quarter, Intel reported revenue of $12.7 billion and earnings of $0.13 per share, beating market expectations. However, the company emphasized that this early strength might not continue through the rest of the year due to growing market challenges and weakening demand.
To address these issues, Intel is making major changes within the company. CEO Lip-Bu Tan said that internal complexity had been slowing down innovation, so he has restructured the leadership team. Now, all major functions such as product development, manufacturing, and general operations will report directly to him. At the same time, the company is focused on cutting costs. Intel has lowered its operating expense goal for 2025 to $17 billion and is aiming for $16 billion in 2026. While layoffs are being considered, no final decisions have been made. Zinsner explained that all types of spending will be reviewed, not just employee headcount.
Intel also reduced its planned capital spending for 2025 by $2 billion, bringing the new target down to $18 billion. The company plans to make better use of existing construction projects rather than launching new ones. Zinsner said there is around $50 billion in ongoing projects, and the goal now is to get better returns from those investments.
The company expects slower performance in core areas such as data centers and chip manufacturing. Gross margins are predicted to drop to 36.5% in the second quarter, down from 39.2% in the first quarter. This decline is linked to higher production costs, outsourcing, and early-stage investments in new chip technology.
Even with these challenges, Intel says it remains on track to launch its new Panther Lake chips by the end of 2025. These chips will be built using the advanced 18A process and are expected to serve the growing market for AI-powered personal computers. Intel President Michelle Johnston Holthaus said there is already strong interest from businesses planning to upgrade.
CEO Tan made it clear that Intel’s recovery will take time and involve big changes in company culture, design, and how they work with clients. He said there are no quick fixes but believes that by removing inefficiencies and changing how Intel operates, the company can cut costs and rebuild customer trust.
