- Chipmaker Intel has announced plans to cut around 17,500 jobs, or 15% of its workforce, as part of a broader strategy to reduce costs and realign operations, following a net loss of $1.6 billion in the second quarter.
- The company aims to save$10 billion by 2025, and its stock dropped 19% in after-hours trading, potentially losing $24 billion in market value.
OUR TAKE
Intel’s restructuring demonstrates its commitment to financial recovery and competitiveness amidst industry shifts. The layoffs and cost-cutting measures are necessary steps to improve profitability. However, Intel must also innovate and capitalise on AI and semiconductor advancements to regain its leading position in the chip market.
–Vicky Wu, BTW reporter
What happened
Chipmaker Intel has announced plans to cut approximately 15% of its workforce, equivalent to around 17,500 jobs, as part of a broader strategy to reduce costs and realign the company’s operations. The move comes after a disappointing financial quarter and forecast, with Intel posting a net loss of $1.6 billion for the second quarter. The company′s CEO, Pat Gelsinger, outlined there structuring plan in a memo to staff, stating that the goal is to save $10 billion by 2025. The cost-cutting measures will include an “enhanced retirement offering” and a voluntary departure programme for eligible employees.
Intel’s stock plummeted 20% in after-hours trading, setting the chipmaker up to lose more than $24 billion in market value. During the April-to-June period, the company posted a loss of $1.6 billion, equating to 38 cents per share. This contrasts with a profit of $1.5 billion, or 35 cents per share, recorded in the same period last year. Adjusted earnings, excluding special items, amounted to 2 cents per share. The company’s revenue declined by 1% to $12.8 billion, falling short of Wall Street expectations.
Also read: Intel confirms launch for ‘Lunar Lake’ laptop chips on September 3
Also read: Intel confirms 13th/14th generation processor stability issues
Why it’s important
Intel’s decision to cut jobs and reduce costs highlights the challenges faced by the iconic chipmaker in a rapidly changing industry. The company is under pressure from competitors like Nvidia and AMD, which have gained significant market share, especially in the lucrative AI chip market. Intel’s manufacturing struggles and recent product issues, such as instability in its 13th- and 14th-generation desktop CPUs, have further eroded its position.
“Intel’s announcement of a significant cost-cutting plan including layoffs may bolster its near-term financials, but this move alone is insufficient to redefine its position in the evolving chip market,” said eMarketer analyst Jacob Bourne. “The company faces a critical juncture as it leverages U.S. investment in domestic manufacturing and the surging global demand for AI chips to establish itself in chip fabrication.”
The cost-cutting measures, including the layoffs, are aimed at improving Intel’s financial health and competitiveness. However, the company must also address its long-term strategic direction and technological advancements, particularly in AI and semiconductor manufacturing. Intel’s ongoing efforts to build up its foundry business and secure government funding for domestic chip production highlight its commitment to remaining a key player in the industry.
