- Intel is laying off 15,000 employees, which is over 15% of its staff, as part of a plan to cut $10B in spending by 2025.
- This move comes after a disappointing second-quarter earnings report and a gloomy outlook for the rest of 2024.
OUR TAKE
Intel’s decision to lay off 15,000 employees highlights the company’s urgent need to adapt to a rapidly changing tech landscape. As competitors thrive in the AI market, Intel’s struggles to keep pace underscore a critical inflection point for the company. The layoffs may help reduce costs, but they also reflect deeper issues related to innovation and market relevance. Moving forward, Intel must find a way to leverage its historical strengths while embracing new technologies to regain its leadership position in the semiconductor industry.
-Lilith Chen, BTW reporter
What happened
In a memo to employees, CEO Pat Gelsinger cited underwhelming revenue growth and high operational costs as driving factors behind the decision. “Our revenues have not grown as expected, and we’ve yet to fully benefit from powerful trends, like AI,” Gelsinger wrote. Despite Intel’s historical dominance in the CPU market, the company has struggled to adapt to emerging technologies such as AI and smartphones, which has hindered its ability to compete with rivals like Nvidia.
Intel reported a 1% decline in revenues for the second quarter compared to the same period last year, largely due to challenges with its AI PC products. The company also plans to suspend its shareholder dividend starting in the fourth quarter of 2024 and anticipates more difficult market conditions ahead.
In addition to layoffs, Intel will offer a voluntary departure program and enhanced retirement options for eligible employees to further streamline operations.
Also read: Google lays off at least 100 jobs across its cloud unit
Also read: Microsoft restructures Azure team, lays off hundreds
Why it’s important
Gelsinger’s announcement highlights the significant challenges Intel faces in a rapidly evolving tech landscape, particularly regarding the growing AI market. While competitors like Nvidia have enjoyed substantial revenue growth during the AI boom, Intel’s situation is starkly different, with revenues plummeting by $24B from 2020 to 2023. This decline occurred even as Intel increased its workforce by 10%, reflecting an inability to effectively capitalise on emerging trends.
The current layoffs of 15,000 employees signal an urgent need for Intel to streamline operations and rethink its strategy. Adjusting to changing market demands and focusing on innovation will be critical for the company to regain its competitive edge. If Intel can successfully pivot and embrace new technologies, it may yet find a path back to prominence in the semiconductor industry. The road ahead is challenging, but with the right strategies, Intel can work to restore its leadership position.
