Tan did not provide details about the number of employees affected, but said he was "a big believer in the philosophy that the best leaders get the most done with the fewest people."
Despite the promise of cost-cutting and an earnings report that bested market expectations, Intel's share price sank more than five percent after it reined in its financial outlook for the current quarter due to broader market conditions.
"The economic landscape has become increasingly uncertain, driven by shifting trade policies, persistent inflation and increased regulatory risk," Intel chief financial officer David Zinsner said during an earnings call.
"The very fluid trade policies in the US and beyond, as well as regulatory risks, have increased the chance of an economic slowdown with the probability of a recession growing."
Intel reported a loss of $800 million on revenue of $12.7 billion in the first three months of this year. The chip maker forecast revenue of between $11.2 and $12.4 billion in the current quarter.
Bloomberg reported that more than 20 percent of staff could be laid off.
When asked by AFP for more details about the job cuts, a spokeswoman did not offer figures, but referred to an email to staff from Tan, who said the layoffs would begin in the current quarter and continue "over the next several months."
"As we refocus on engineering, we will also remove organizational complexity," Tan said in the note to staff.
"There is no way around the fact that these critical changes will reduce the size of our workforce."
Malaysia-born tech industry veteran Tan, who took over as Intel chief executive in March, has said it "won't be easy" to overcome challenges faced by the company.
- Competition from Nvidia -
Intel is one of Silicon Valley's most iconic companies, but its fortunes have been eclipsed by Asian powerhouses TSMC and Samsung, which dominate the made-to-order semiconductor business.
The company was also caught by surprise with the emergence of Nvidia as the world's preeminent AI chip provider.
Intel's niche has been in chips used in traditional computing processes being eclipsed by the AI revolution.
"I strongly believe we can reduce our costs while securing our future," Tan said.
"Our competitors are lean, fast and agile -- and that's what we must become to improve our execution."
Tan's predecessor, Pat Gelsinger, was forced out as Intel chief in December after the board lost confidence in his plans to turn the company around.
Former US president Joe Biden's administration last year finalized a $7.9 billion award to Intel as part of an effort to bring semiconductor production to US shores.
But Intel in February extended the timeline for completing two new fabrication plants in Ohio, saying it is taking a prudent approach to the $28 billion project.
Intel has also delayed projects in Germany, Poland and Malaysia.
gc/sst
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