- Chipmaker Intel, which reports quarterly results on Thursday, has seen its shares fall 40 percent so far this year.
- Intel’s cost-cutting plan, which includes layoffs, is expected to save $8 billion to $10 billion by 2025.
OUR TAKE
Intel remains a major player in the PC and server markets, but has struggled to keep up with growing demand for chips used in artificial intelligence applications. CEO Pat Gelsinger has launched a turnaround plan to regain the company’s competitive edge, focusing on reinvigorating its manufacturing capabilities, investing in advanced chip technology, and expanding into new markets.
–Zora Lin, BTW reporter
What happened
Intel plans to cut thousands of jobs to fund its recovery and combat a decline in market share, Bloomberg reported on Tuesday. The chipmaker, which reports quarterly results on Thursday, has seen its shares fall 40 percent so far this year.
In October 2022, Intel announced a cost-cutting plan that included “people actions” to reduce its workforce from 131,900 a year earlier to 124,800 by the end of 2023, according to regulatory filings.
The company said in February last year that the plan was expected to save $8 billion to $10 billion in annual costs by 2025.
According to LSEG, analysts expect the company’s second-quarter revenue to be flat from a year ago, with its data center and artificial intelligence business down 23 percent.
Also read: Intel confirms 13th/14th generation processor stability issues
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Why it’s important
Intel’s transformation plan reflects the company’s need to timely adjust its strategy in the face of market and technological changes, especially the improvement of competitiveness in the field of AI and the revitalisation of manufacturing capabilities, which are key initiatives in response to technological progress and changes in market demand.
Through layoffs and cost reductions, Intel aims to improve operational efficiency and fund future investments and market expansion. This will help companies remain flexible and resilient in the face of economic pressures and market competition.
The sharp share price drop and the change in revenue guidance reflect market concerns about Intel’s current strategy and financial health. This indicates that investors and analysts are cautious about the company’s future performance and are focused on whether it can successfully execute its transformation plan.
