iNDICA NEWS BUREAU-
Global tech giant Intel Corp. announced Thursday, August 1, that it is cutting 15% of its massive workforce, which will affect 15,000 employees, in order to turn its business around and compete with current market leaders Nvidia and AMD.
The chip makers from Santa Clara, California, stated that they also suspending its stock dividend, a move which is part of a broader cost-cutting plan. The bulk of the 15% layoffs will be done in 2024.
“We plan to deliver $10 billion in cost savings in 2025, and this includes reducing our head count by roughly 15,000 roles, or 15% of our workforce,” Pat Gelsinger, CEO, Intel Corp., told staff in a memo.
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate.”
“Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low.
“These decisions have challenged me to my core, and this is the hardest thing I’ve done in my career,” his memo read.
Intel reported a loss of $1.6 billion in its April-June quarter. The revenue also declined by 1% to $12.8 billion from $12.9 billion. Intel’s revenue prediction for the July-September quarter also falls below Wall Street’s expectations, according to reports.
The company’s stock also fell 19% in after-hours trading, and Intel could potentially lose an approximate $24 billion of its market value when the stock market opens Friday, the Associated Press reported.
“Intel’s announcement of a significant cost-cutting plan including layoffs may bolster its near-term financials, but this move alone is insufficient to redefine its position in the evolving chip market,” said eMarketer analyst Jacob Bourne, as quoted by AP. “The company faces a critical juncture as it leverages U.S. investment in domestic manufacturing and the surging global demand for AI chips to establish itself in chip fabrication.”
