In a bold move to optimize its activities and stay ahead of rivals like Nvidia and AMD, Intel Corp. announced on Thursday that it will reduce about 15 % of its worldwide workforce, which would amount to 15, 000 work. According to a letter from Intel CEO Pat Gelsinger, the broad cuts are a part of a larger plan to preserve$ 10 billion by 2025.
Simply put, we must ultimately alter how we operate in addition to our innovative operating model, according to Gelsinger. He cited sluggish revenue growth and the company’s slow adaptation to new trends like artificial intelligence ( AI ) as main causes of the drastic measures.
The job cuts follow a challenging quarter for Intel, which reported a$ 1.6 billion loss in its April-June earnings report, alongside a slight revenue decline to$ 12.8 billion. The disappointing performance led to a 19 % drop in Intel’s stock during after-hours trading, signaling a potential$ 24 billion loss in market value when trading resumes on Friday. To further restrict expenses, Intel even announced the expulsion of its investment income, a move that underscores the intensity of the company’s financial troubles. By the end of the year, the cutbacks and other cost-cutting actions are anticipated to be mostly completed.
In his letter, Gelsinger acknowledged the problems of the choice, calling it” the hardest item I’ve done in my job”. For qualified employees, the company intends to provide increased pension options and a volunteer leave program.
However, analysts doubt that Intel’s position will be repositioned by these price increases alone in the fast expanding semiconductor sector. According to eMarketer researcher Jacob Bourne, Intel’s statement of a major cost-cutting plan, including layoffs, may help its near-term financials. However, this action alone does not change how it positions itself in the constantly evolving chip market.
Intel has struggled to keep up with rivals like Nvidia, whose supremacy of the market for AI chips has been particularly difficult. Unlike its foes, Intel also manufactures its own cards, which has placed extra pressure on the company’s profits as it invests heavily in expanding its U. S. factory business.
The agency’s efforts have been buoyed by substantial support from the U. S. government, especially through the 2022 CHIPS and Science Act, which aims to boost domestic semiconductor production. Intel has secured up to$ 8.5 billion in direct funding and$ 11 billion in loans to build new chip plants across the country, part of a long-term strategy to reduce reliance on Asian-made semiconductors.
Gelsinger acknowledged that Intel’s rely on the Artificial PC market would shorten profit margins, but he still had faith in the trade-offs to succeed in the long run. ” We believe the trade-offs are worth it. The Artificial Laptop will increase from less than 10 % of the market today to greater than 50 % in 2026″, he told analysts.
