Story adjusted to say Intel layoffs are expected to be 15,000
Intel on Thursday announced heavy job cuts of 15% of its workforce, with most reductions by the end of the year. The cuts are part of a $10 billion cost reduction plan.
The company recently had about 110,000 workers, which suggested layoffs could reach 16,500 workers, but CEO Pat Gelsinger in a note to workers on Thursday put the layoffs at 15,000, or 15% of the total. Intel had undergone a 5% workforce reduction in 2023 after first announcing job cuts in late 2022. At that time, the company expected to save about $10 billion by 2025.
In the letter to employees, he acknowledged the path forward won't be easy. "This is a tough day for all of us and there will be more tough days ahead," Gelsinger added.
Second quarter results also showed Intel revenues down 1% compared to a year earlier, reaching $12.8 billion.
Intel stock dropped as much as 5% on the news. Meanwhile, Intel shares have dropped 39% year to date and leveled off at $29.05 after market close Thursday.
In a statement for shareholders, Gelsinger called the Q2 performance disappointing and added that second-half trends "are more challenging than we previously expected." But he said Intel will accelerate its fab capabilities and again said it will launch Intel 18A chip technology next year "to regain process technology leadership."
Intel faces competition on multiple fronts, including where it has traditionally excelled in chips for laptops and desktops. Nvidia and AMD are the biggest competition in GPUs and accelerators for generative AI processing.
Gelsinger has put a heavy focus on manufacturing chips and last week hired Naga Chandrasekaran to be Intel’s chief global operations officer, where he will oversee manufacturing efforts. Intel has won multibillion grants from the US CHIPS Act and European governments to build new fabs. Chandrasekaran came from Micron Technology, where he was senior vice president of Technology Development. He starts Aug. 12 and replaces Keyvan Esfarjani, who is retiring after nearly 30 years at Intel.
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While thousands of job cuts would obviously hurt individual workers, the action could help Intel focus more heavily on the major growth areas.
"Intel had a terrible quarter and I'm predicting it will take some time to recover," said Jack Gold, founder and chief analyst at J. Gold Associates. "That said, I do think Intel will turn it all around, especially as they reduce costs. It's unfortunate they have to have a major layoff...but given the changes going on in the market, Intel needs to make significant changes in operations."