Intel Corporation has unveiled a drastic restructuring plan on August 1, 2024, in response to mounting financial pressures and intensifying competition in the chip industry. The plan includes cutting over 15% of its workforce, affecting approximately 18,750 employees, and suspending dividend payments starting from the fourth quarter of 2024.The company reported a net loss of $1.6 billion in the second quarter of 2024, a stark contrast to the $1.5 billion profit recorded in the same period last year. Revenue declined by 1% year-over-year to $12.8 billion, falling short of analyst expectations. In response to these challenges, Intel aims to reduce costs by $10 billion by 2025 through various measures, including workforce reduction and lowering capital expenditures from $25-27 billion in 2024 to $20-23 billion in 2025.CEO Pat Gelsinger described the quarterly results as ‘disappointing’ and warned of a challenging road ahead. ‘Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,’ Gelsinger stated in a memo to staff. The restructuring plan also involves a shift in Intel’s business model, with the company planning to focus on becoming a contract manufacturer for other chip developers and invest heavily in emerging technologies like artificial intelligence.However, analysts remain skeptical about the effectiveness of these measures. Jacob Bourne from Emarketer cautioned that while the cost-cutting plan may support Intel’s finances in the short term, it does not address the company’s position in the evolving chip market, particularly in AI. Intel has struggled to develop competitive processors for artificial intelligence, lagging behind market leader Nvidia.Intel’s stock price fell by up to 20% in extended trading following the announcement, resulting in a loss of over $24 billion in market value. The company expects to complete most of the job cuts by the end of 2024 and plans to offer improved retirement packages and a voluntary exit program for eligible employees.
Key points
- Intel plans to cut over 15% of its workforce, affecting approximately 18,750 employees.
- The company reported a net loss of $1.
- Intel aims to reduce costs by $10 billion by 2025 and lower capital expenditures to $20-23 billion in 2025.
- The company is struggling to compete in the AI chip market, lagging behind rivals like Nvidia.
6 billion in Q2 2024, compared to a $1.
5 billion profit in the same period last year.
Contradictions👾Some sources report 15,000 job cuts, while others mention 18,750.
This discrepancy may be due to different interpretations of the 15% workforce reduction.
