Intel is in the final stages of cutting over 15,000 jobs, which is about 15% of its global workforce. This action is part of a broader restructuring plan, bringing the workforce down by 22% from mid-year levels to around 75,000 employees.
The company is also reducing its manufacturing efforts by canceling plans for new chip factories in Germany and Poland. Additionally, it will close an assembly site in Costa Rica and consolidate operations in Vietnam and Malaysia. Intel’s Ohio fabs, once planned to open in 2025 and then postponed to 2030, now have an uncertain timeline.
Intel has warned that it might exit advanced chip manufacturing within four years. This decision depends on whether it can attract enough external clients for its Intel Foundry business. CEO Lip-Bu Tan commented on past over-investments in capacity, noting that factory expansion plans were deemed “unwise and excessive.” The company’s factory footprint has become fragmented due to these decisions.
We believe this announcement presents a clear bearish signal for the stock in the coming weeks. The combination of deep job cuts, canceled factories, and a potential exit from its core business creates significant downside risk. Traders should therefore focus on strategies that profit from a falling share price, primarily through the use of put options.
The level of strategic uncertainty is causing a surge in implied volatility, which we have seen spike above 45% around recent earnings calls and major announcements. This makes options more expensive but rewards traders who correctly anticipate large price swings. We advise using this elevated volatility to your advantage, as it indicates the market is pricing in significant movement.
This situation is amplified when compared to rivals like Nvidia, which recently reported quarterly revenue growth exceeding 260% year-over-year, driven by its dominance in the AI space. This stark contrast highlights a fundamental market shift that is leaving the company behind. Tan’s admission of “unwise and excessive” investment only reinforces the view that the company is struggling to compete.
We see parallels to the difficult transitions of other tech giants, such as IBM in the 1990s, which involved years of restructuring before a stable business model emerged. That historical precedent suggests any turnaround will be a multi-year process filled with volatility and execution risk. For traders, this means short-term rallies should be viewed with skepticism and may present opportunities for new bearish positions.
Given the high cost of options, we suggest traders consider using spreads to define risk and lower their entry cost. A bear put spread, for example, allows for profiting from a moderate downward move while capping the initial premium paid. This is a more capital-efficient way to express a bearish view in the current high-volatility environment.
