It's actually more complex than that, when a big company wants to reduce workforce they will fire the bottom and offer retirement packages to their oldest employees which are above or near retirement age, sometime as much as a full year of salary.
The intuition is that older employees cost more and by cutting them you can reduce your payroll more significantly while doing what looks like smaller employee cuts from the outside. This is often viewed favourably by investors because on paper it doesn't seem as the company is stalling (head count is still high, costs are down). The obvious issue is that these older employees are not easily replaceable and you end up losing more velocity in the long run than originally anticipated.
The above is more applicable to traditional blue-chip businesses where workforce movements are more limited. For software engineering (which Intel is not really) your assumption is correct and once cuts are announced a lot of your great engineers will jump ship.
Those older employees better be replaceable! Many will be gone in a few more years because they retire anyway, so you should have a plan in place to save their knowledge.
The above applies to everyone. When I was an intern the company folklore was full of horror stories because the last guy knew anything about a very profitable product died suddenly. (the product was for mainframes: clearly near end of life, but it was still mission critical for major customers and got had to get minor updates)
I've also known important people to find a better job. Even when an offer of more money gets them to stay, my experience is they always wonder if they made the right decision and so are never again as good as they were before.
Moral of the story: don't allow anyone in your company to get irreplaceable. This is good for you too: it means you won't stagnate doing the same thing over an over.
The vendor of one of the security scanning tools we had subscribed to for the past six years told us they were shutting down the product because the PM left and no one else in the company wanted to take it over. I don't know how many SEs and other resources they had on the product but it was a major part of their offerings. They didn't even have an alternate upsale (or downsale for that matter) to offer us. So strange one person leaving could collapse an entire revenue stream like that.
I would venture that this is indeed how these exec rationalize the whole process. No one should be irreplaceable and therefore the move make sense. Even though management bashing is trendy these days, most managers/execs know these things and are not the idiots we satirize them to be.
Even Swan is probably not an idiot, he simply expected everyone to struggle as much as Intel on the 7/10nm node and when TSMC just breezed past Intel and AMD came out with a much better product than anticipated he found himself in very hot water.
(He could also be quite the idiot, I don't know him)
I work (but not for much longer) for a tech company that has done an ER package twice (and is well known for layoffs). The result is that the company has a sort of corporate alzheimers. It knows the inventory of all the things it used to know, but doesn't actually seem able to recall anything. The trajectory and outlook are not good.
I don't think tech companies can afford this practice. So much knowledge resides in their senior talent, and the hard-won experience-based understanding and things gleaned through opportunistic exposure that they seem to voluntarily surrender.
The intuition is that older employees cost more and by cutting them you can reduce your payroll more significantly while doing what looks like smaller employee cuts from the outside. This is often viewed favourably by investors because on paper it doesn't seem as the company is stalling (head count is still high, costs are down). The obvious issue is that these older employees are not easily replaceable and you end up losing more velocity in the long run than originally anticipated.
The above is more applicable to traditional blue-chip businesses where workforce movements are more limited. For software engineering (which Intel is not really) your assumption is correct and once cuts are announced a lot of your great engineers will jump ship.