Intel has announced plans to lay off approximately 15,000 employees by the end of this year as part of a broader strategy to cut costs. This reduction is equivalent to about 15% of the company’s global workforce
In a memo to employees, Intel CEO Pat Gelsinger said that the company aims to reduce costs by $10 billion by 2025. The layoffs are one of the main measures of Intel’s attempt to synchronize its expenditures with the new business model.
Intel struggles to capitalize on AI market trends
For the second quarter, the company recorded $12.8 billion in revenue, which is 1% less than the previous year’s revenue. Gelsinger blamed the need for such action on the lack of revenue growth and the company’s inability to capture the right trends like Artificial Intelligence.
Gelsinger pointed out that the company has made the choice to cut down the workforce so as to optimize its resources and save on cost. He noted that due to high costs and low margins, Intel needs “more aggressive” measures to enhance its performance. The company is expected to encounter some tough times in the second half of the year 2024, and therefore, the firm requires operating cost cuts.
Besides the workforce reduction, Intel is to introduce an improved retirement package for the eligible employees and a voluntary separation program. Gelsinger noted that these changes are meant to be consistent with the new culture at Intel and intended to preserve respect for the principles of the company’s employees during the change process.
Gelsinger described the announcement as painful and understood that any such changes are very emotional. He said that this is one of the most complex phases in his career, and he is ready to keep the company’s values of openness and decency during such transformations.
Canadian offices face uncertain future amid global cuts
Intel’s job cut is part of other big firms that have recently undertaken layoffs, such as Tesla, Cisco, Indeed, and Citigroup. This is in line with the current trend of downsizing that has swept across many large corporations.
Intel has several offices in Canada, with facilities in Toronto, Vancouver, and Waterloo, Ontario. The effects of the layoffs on these particular offices have not been explained in detail, but they fall under the general global downsizing plan.
In its second quarter, the company revealed an 85% decrease in net income, which dropped to $83 million from $548 million in the same period as the previous year. The recent financial performance of Intel shows the challenges that the company has been undergoing in the semiconductor market.
Although trying to leverage the AI boom, Intel’s revenue from its AI and data center group fell by 3% compared to the same quarter of the previous year to stand at $3 billion. This is different from AMD, which posted a 9% revenue growth to $5.8 billion and a 19% growth in net income to $1.1 billion due to strong sales of AI data center chips.
