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Intel has announced plans to cut more than 15% of its workforce, amounting to approximately 15,000 jobs, as part of a major restructuring effort.?
This move comes as the semiconductor giant loses ground to rivals such as Nvidia and AMD in the AI chip market.
The announcement came alongside Intel’s disappointing second-quarter financial results for 2024. The company reported a net loss of $1.6 billion compared to a profit of $1.5 billion in the same period last year. Revenue slightly declined by 1% to $12.8 billion, falling short of analysts’ expectations.
The job cuts are part of a broader cost-reduction strategy aimed at saving $10 billion by 2025, the company said in its latest earnings call. In addition to the layoffs, Intel will also suspend its stock dividends starting in the fourth quarter of 2024, marking a shift in its financial approach compared to previous years.
In his remarks on the Q2 earnings results, Intel CEO Pat Gelsinger described the quarterly results as “disappointing” and acknowledged that the challenges they faced in the second quarter were tougher than previously expected.?
Intel’s Plans to Bounce Back
Despite these challenges, Intel remains optimistic about turning things around in the future. The company said it will leverage its new operating model to take decisive actions to improve operating and capital efficiencies while accelerating its IDM 2.0 transformation. In addition to that, the company is focusing on regaining process technology leadership with the launch of Intel 18A next year and continues to invest in expanding its foundry business.
While the majority of the job cuts are expected to be finalized by the end of 2024, it remains unclear how these reductions will impact Intel’s global operations and help it compete in the AI chip race against the likes of Nvidia and AMD.
Intel’s biggest competitor Nvidia had a 27% jump in shares last May, pushing its market cap to $2.7 trillion. For the third consecutive quarter, Nvidia reported a threefold increase in year-over-year sales, fueled by skyrocketing demand for its AI processors.?
As Intel navigates this difficult period, all eyes will be on the company’s progress to see whether it is able to regain a good chunk of the market share in the semiconductor industry.
