Intel is preparing to lay off between 1,500 and 3,000 employees in its Foundry Services division, part of a broader effort to restructure the business amid struggles to compete in the global chip manufacturing race. The cuts represent about 15% to 20% of the foundry workforce and are set to begin in July, with the Hillsboro, Oregon campus — Intel’s largest U.S. site — expected to be among the hardest hit.

This move follows disappointing performance from Intel Foundry Services (IFS), the business unit launched in 2021 to rival major chip manufacturers like TSMC and Samsung. IFS generated just $952 million in revenue in 2023, a 33% year-over-year drop, and posted nearly $1.2 billion in operating losses. Despite deals with companies like AWS, Qualcomm, and Tower Semiconductor, the unit has struggled to attract substantial business and remains significantly behind competitors in advancing to leading-edge chip manufacturing technologies like 3nm and 2nm nodes.

These layoffs are part of CEO Pat Gelsinger’s strategy to refocus Intel on its core strengths in engineering and product development. Intel is divesting from less profitable or non-strategic areas, including parts of its Network and Edge (NEX) group and FPGA unit Altera (which is currently being spun out via IPO). The company also previously exited its Optane memory business and laid off 15,000 employees in 2023, aiming to save $10 billion by 2025.

Locally, the job cuts are expected to have a major impact. Intel is Oregon’s largest private employer, and Hillsboro Mayor Steve Callaway called the news “devastating,” urging Intel to work with regional support agencies to minimize disruption. Employees are expressing frustration over the lack of transparency and direction, with many taking to forums and social media to share concerns.

Intel’s latest restructuring highlights the deep challenges it faces in regaining leadership in the global semiconductor industry, particularly as AI demand surges and rivals like NVIDIA and TSMC solidify their dominance.