Intel sets a stringent requirement for new product approvals to enhance gross margins: a minimum of 50% gross profit is necessary for product launch approval.
Intel's Profit-Driven Shift: The New 50% Gross Margin Policy
Intel's ambitious plan is to only pursue projects promising a whopping 50% gross margin, as announced by Michelle Johnston Holthaus, CEO of Intel Products, at the Bank of America's global tech conference. This means that future projects will need to prove their potential for financial success, or they won't get the green light.
Holthaus explained that Intel needs to focus on financially viable projects to avoid costly failures and align with shareholder expectations. She stated, "we need to ensure every new product we develop is profitable and meets industry benchmarks." This high margin requirement is a departure from Intel's previous growth-at-all-costs mentality, indicating a shift towards a more financially cautious strategy.
Intel's new CEO, Lip-Bu Tan, is driving this change. He is laser-focused on restoring Intel's gross margins above 50%, a level that competitors like AMD and Nvidia have already achieved. To accomplish this, Tan is reportedly examining unprofitable deals and may consider canceling or reworking them.
Recent months have seen a decline in Intel's gross margins with their Q1 2025 trailing 12-month gross margin dipping to a low of 31.67%. Prior to the pandemic, Intel's gross margins hovered around the 60% mark. It's time for Intel to regain its financial footing!
Ahead, Engineering and execs may face a challenging balancing act as they build products that meet both customer requirements and a profitable cost structure. But with Lip-Bu Tan's vision to turn Intel into an engineering-focused company, top-tier talent is being recruited, and resources will be allocated smartly across the most promising projects.
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What does this mean for Intel's much-anticipated Panther Lake and Nova Lake projects and other product roadmaps? Find out in our comprehensive analysis!
Learn more about Intel's competition and their current gross margin statistics:
- Intel vs AMD Gross Margin Comparison
- Nvidia Gross Margin Analysis
- To meet Intel's new 50% gross margin policy, the Panther Lake and Nova Lake projects, along with other product roadmaps, might undergo significant changes or prioritization, focusing on high-margin, high-growth opportunities.
- The stringent new 50% gross margin policy at Intel could lead to the de-prioritization or discontinuation of lower-margin or niche products, as the company aims to streamline its product portfolio and shift towards a more financially disciplined and engineering-focused strategy.
