Intel is implementing a stricter profit policy as part of efforts to regain financial stability after years of declining margins. At the Bank of America Global Technology Conference, Johnston Holthaus, CEO of Intel Products, announced that Intel will no longer approve new product developments unless they are expected to achieve at least a 50% gross margin.
According to Tom's Hardware, Holthaus emphasized that Intel had previously supported low-margin projects but will now reallocate engineering resources away from such initiatives. While not all business units are expected to hit the 50% target immediately, Intel will use it as a benchmark for future product planning, including upcoming roadmaps like Panther Lake and Nova Lake.
In parallel, according to Wccftech, Holthaus stated that customers are currently deploying Granite Rapids, while the upcoming Clearwater Forest and Diamond Rapids—part of Intel's E-core and P-core product lines—are scheduled for launch in 2026, which will help reverse current market trends and begin to regain market share.
This shift reportedly stems from the direction set by Intel's new CEO, Lip-Bu Tan, who has made improving profitability a top priority. Tan is reviewing existing partnerships and is said to be considering the cancellation or revision of unprofitable deals.
Holthaus acknowledged internal friction as the company adapts, saying Intel must balance market competitiveness, customer demands, and cost efficiency. "This indeed requires balancing both," he said, referring to innovation and financial discipline.
The new strategy comes as Intel's gross margin continues to languish. According to MacroTrends, the company's gross margin fell to 31.67% in the twelve months ending in the first quarter of 2025—down from over 60% in the decade before COVID-19. Intel first dipped below the 50% mark in the second quarter of 2022 and has since struggled to recover.
Intel has historically seen lower profit margins in several segments outside its core CPU business. Nasdaq.com notes its previous non-volatile memory business, including NAND SSDs and 3D XPoint products, had lower gross margins. Additionally, Intel's XMM modem chips, once supplied to Apple, had margins in the high-20% to low-30% range, significantly below the company's usual standards. The foundry business also shows weaker profitability.
Article edited by Jack Wu
