Intel Imposes 50% Gross Margin Rule on New Products to Boost Profitability

Intel has implemented a strict new policy requiring all new products to achieve at least a 50% gross margin to move forward with development and launch, as announced by Intel Products CEO Michelle Johnston Holthaus. This move aims to restore profitability amid recent declines, with Intel's gross margins slipping to as low as 31.67% in early 2025, well below the 60% margins seen before the pandemic. The policy means engineering resources will not be allocated to projects that cannot demonstrate the potential to double investment returns, focusing efforts on financially viable products like Panther Lake and Nova Lake. CEO Lip-Bu Tan is driving this strategic shift to prioritize profitable projects and reconsider or cancel unprofitable deals, signaling a cultural and operational overhaul within the company. Intel also plans to optimize its manufacturing strategy by dual-sourcing from its own foundry, TSMC, and Samsung to ensure competitive product output. While this margin-focused approach aims to stabilize Intel's financial performance and satisfy shareholder expectations, there are concerns it could limit innovation and the development of riskier, emerging technologies.