Intel appears poised to announce job cuts when it reports quarterly results Thursday, a painful step that reflects the limits of the chipmaker’s turnaround strategy as it reckons with a cooling economy and encroaching competitors.

CEO Pat Gelsinger described the pending cuts as “targeted” in a message to employees last week, appearing to suggest they won’t be nearly as severe as the widespread layoffs that rocked the company in 2016.

Still, Intel has put itself in an uncomfortable position this fall: poised to lay off thousands of American workers at the same time it’s seeking to win billions of dollars from the federal government by promising to create more jobs.

And Gelsinger is having an increasingly difficult time selling Wall Street on his plan to revive Intel’s business after years of technological setbacks. Though he is adamant that Intel remains on track to deliver five new generations of chip technology in four years, investors take an increasingly dim view.

Intel’s stock has lost roughly half its market value this year, handily outpacing the broader market declines. While Gelsinger pitches his strategy as an attempt to restore Intel’s engineering prowess, many investment analysts see the plan not as a throwback but as a relic — obsolete, like an old piece of technology.

Intel’s strategy of integrating its factories and engineering is “is misaligned with the industry’s direction” of increased specialization, BofA Securities analyst Vivek Arya wrote in a note to clients last month. He said Intel is poorly positioned against rivals who specialize in either chip design or manufacturing, but not both, and called Intel’s competitive challenge “insurmountable” in the next two or three years.

Intel is Oregon’s largest corporate employer, with 22,000 workers assigned to its campuses in Washington County. The company is at the heart of Oregon’s economy, with thousands of other workers supplying and maintaining billions of dollars in equipment Intel uses to make its chips.

And Oregon represents Intel’s technological core. The company engineers each new generation of chip technology in its D1X research factory in Hillsboro, then replicates the manufacturing process at its factories around the world.

Intel has long maintained that by pairing its chip design and production, the company can operate more speedily than competitors and capture a greater share of the profits.

That thesis has been tested over the past several years as chipmakers including Nvidia and AMD have jumped ahead technologically by focusing only on engineering. They send their designs to contract manufacturer Taiwan Semiconductor Manufacturing Co., which has surpassed Intel as the world’s most advanced chipmaker while concentrating just on production.

When Intel hired Gelsinger last year, its board bought into his plan to spend tens of billions of dollars to restore the company’s own capabilities. Formerly Intel’s chief technology officer before leaving to run software maker VMware, Gelsinger hoped to adapt Intel’s integrated device manufacturing strategy (called IDM) for a new era by expanding to make chips for other companies, too.

That required many more leading-edge factories, at a price tag of $10 billion or more apiece. Gelsinger has committed to build in Arizona, Ohio and Germany and successfully campaigned for Congress and European governments to support his plan with billions of dollars in taxpayer funds.

The problem now is that may not be enough. The chip shortage that emerged during the pandemic has been replaced by a glut, at least among the leading-edge processors Intel makes for PCs and data centers. That means Intel will be spending more even as it has less revenue coming in.

The chip industry is notoriously cyclical, and the current slowdown will certainly be temporary and may yet be brief. But the timing, for Intel, is awful as it embarks on a long-term turnaround strategy.

“It is now abundantly clear that the path to get there was built on a shaky foundation which is now collapsing as PCs appear likely to revert to pre-COVID levels in the near future,” Bernstein analyst Stacy Rasgon wrote in a research note this week.

Delays in Intel’s Sapphire Rapids chips for data centers “widen the window for competitors, and broader macro(economic) issues soften key markets,” Rasgon wrote. The coming layoffs, Rasgon said, “are further evidence of poor planning” since Intel has added almost 18,000 jobs in the 20 months Gelsinger has run the company.