Intel Announces Massive Workforce Reduction to Cut Costs by $10 Billion
- Intel will reduce its workforce by 15% to save $10 billion by 2025.
- The company is struggling with declining revenues and a significant loss in the last quarter.
- Intel’s stock has dropped 20% following the announcement, highlighting its financial challenges.
Intel, a leading US chipmaker, has unveiled plans to cut more than 15% of its workforce, which amounts to about 15,000 jobs. This major reduction is part of a broader strategy to trim $10 billion in costs by 2025. The decision comes after the company reported a significant $1.6 billion loss for the April-June period, reversing a profit of $1.5 billion from the previous year. Revenue also fell slightly by 1% to $12.8 billion, and future revenue projections fell short of expectations.
Intel CEO Pat Gelsinger emphasized the need for these drastic measures, stating that the company’s cost structure must be aligned with its new operational model. He acknowledged that Intel has not capitalized on emerging trends like artificial intelligence (AI) as expected, and its costs are too high relative to its margins. This restructuring aims to address these issues and improve the company’s financial performance.
The announcement led to a dramatic 20% drop in Intel’s stock price during extended trading, indicating potential losses exceeding $24 billion when the market reopens. Once a dominant force in the chip industry, Intel has struggled to keep up with competitors like Nvidia and AMD, especially amid the AI boom.
In June, Intel also paused its major factory expansion in Israel, citing market conditions and responsible capital management. Under Gelsinger’s leadership, the company is now focusing on developing advanced AI processors and enhancing its manufacturing services. Additionally, Intel has received substantial support from the US government, including $19.5 billion in grants and loans to expand semiconductor production domestically.