Chipmaker Intel Corp. has announced plans to cut 15% of its workforce as part of a strategy to revitalize its operations and enhance competitiveness against rivals such as Nvidia and AMD.
The Santa Clara, California-based company revealed this significant workforce reduction on Thursday, outlining a broader initiative to cut costs that will also involve suspending its stock dividend. The majority of the layoffs are expected to be completed within this year.
In its recent financial report, Intel disclosed a loss for the second quarter alongside a slight decline in revenue, projecting third-quarter revenues that fall short of Wall Street expectations. The company experienced a loss of $1.6 billion, or 38 cents per share, during the April-June period, a stark contrast to a profit of $1.5 billion, or 35 cents per share, in the same quarter last year. Adjusted earnings, excluding special items, were just 2 cents per share.
Revenue decreased by 1%, totaling $12.8 billion compared to $12.9 billion. Analysts had anticipated earnings of 10 cents per share on revenue of $12.9 billion, highlighting a significant discrepancy from Intel’s financial outcomes.
Industry analysts are weighing in on the implications of Intel’s drastic cost-cutting measures. One expert indicated that while the layoffs may enhance the company’s short-term financial outlook, they are not enough to shift Intel’s standing in the rapidly evolving chip market. The firm is at a pivotal point where leveraging U.S. investment in domestic manufacturing and the increasing global demand for AI chips will be crucial for its future in chip fabrication.
As of the end of 2023, Intel employed approximately 124,800 individuals, and CEO Pat Gelsinger has indicated that the workforce will be reduced by about 15,000 employees.
