Intel Announces Massive Layoffs: 15,000 Jobs Cut Amid Tech Industry Downturn

Intel cuts 15,000 jobs after 20% stock drop - following the tech layoff trend? | bobsguide

In response to a sharp decline in its stock value, Intel on Thursday revealed plans to cut 15,000 jobs. The announcement of the job cuts came on the heels of a 20% drop in the company's share price. This decline was triggered by Intel's report of a $1.6 billion loss in the April-June period, a stark contrast to the $1.5 billion profit reported in the same period the previous year. Production issues with Intel's Meteor Lake processors and customers' increasing preference for AI chips from competitors like Nvidia have made the financial situation more difficult. Additionally, the company faces significant hurdles due to export restrictions to China, which have further constrained its business operations. Intel's Chief Executive, Pat Gelsinger, emphasised the need for "bolder actions" to address these challenges. The company has also decided to pause non-essential projects, particularly within marketing and R&D, to focus resources on critical areas. This strategic pivot is part of a broader effort to revive profits and enhance Intel's market position. The planned layoffs, which represent a 15% reduction in Intel's workforce, are expected to be completed by the end of 2024, following a previous round of layoffs in October 2022, where Intel announced plans to cut between $8 billion and $10 billion in costs annually through 2025. Despite these measures, Intel's financial outlook remains cautious, with the company predicting further weakening in the coming months as the company navigates a competitive landscape dominated by Nvidia's high-performance AI chips. The latest round of job cuts at Intel reflects deeper issues within the company and the tech industry at large, which has seen significant job cuts since the onset of the COVID-19 pandemic. The trend began in earnest in 2022, as companies adjusted to changing market dynamics and the economic fallout from the pandemic. Two years later, and the pattern continues with numerous firms across industries announcing layoffs of their tech workforce. This year alone, over 60,000 jobs have been cut across 254 companies. Major players like Tesla, Amazon, Google, TikTok, Snap, and Microsoft have all announced substantial workforce reductions, reflecting the broader economic challenges and shifting market dynamics. Several factors have contributed to these widespread layoffs in the tech industry. Primarily, there has been a significant slowdown in demand for tech products and services post-pandemic. Companies that experienced rapid growth and expansion during the height of the pandemic are now facing a normalisation of demand. This adjustment has necessitated cost-cutting measures, including workforce reductions. Moreover, rising interest rates and inflation have increased operational costs for many tech companies, squeezing profit margins and forcing businesses to re-evaluate their expenditure. Regulatory pressures, particularly in regions like the European Union, have also imposed further financial and operational constraints on these firms. Additionally, the rapid advancements in artificial intelligence (AI) and automation have led to a re-evaluation of roles that were once considered indispensable. Companies are increasingly investing in AI technologies to streamline operations and reduce costs, often at the expense of human jobs. The layoffs have not been confined to a single sector within the tech industry. From e-commerce giants like Amazon to gaming companies like EA, the impact has been widespread. For instance, Amazon reported a 10% rise in sales to $148 billion but still faced a 4% drop in shares due to slowing growth and increased investment in AI. Similarly, EA announced a 5% reduction in its workforce, citing the need to focus on new roles and projects. These workforce reductions have significant implications for innovation. While companies aim to become more efficient and competitive, the loss of experienced employees can hinder their ability to innovate and adapt to new market trends. Moreover, the human impact of these layoffs cannot be overlooked. Employees at all levels, from entry-level positions to senior executives, have been affected. This trend has also sparked concerns about the long-term health of the tech job market and the potential for a brain drain as talented professionals seek more stable employment opportunities outside the tech sector.

This company to cut 15,000 jobs in one of biggest mass tech layoffs since COVID-19 pandemic

The company, headquartered in Santa Clara, did not disclose the number of employees in the Bay Area that will be affected. On Thursday, Intel confirmed its plan to eliminate around 15,000 positions, which constitutes 15% of its global workforce of approximately 100,000 employees. The company will also halt dividend payments starting in the fourth quarter until cash flows improve. This significant reduction marks one of the largest mass layoffs by any company since the onset of the COVID-19 pandemic. The company, headquartered in Santa Clara, did not disclose the number of employees in the Bay Area that will be affected. Earlier this year, Tesla laid off about 14,000 workers, while Google reduced its workforce by around 12,000 in 2023. Intel reported disappointing second-quarter earnings and announced a $10 billion cost-cutting measure. Consequently, its shares dropped by approximately 20% in after-hours trading, wiping out $24 billion in market capitalization. The company's sales for the quarter were $12.8 billion, reflecting a 1% year-over-year decrease. Revenue for the current quarter is projected to be between $12.5 billion and $13.5 billion, falling short of the average analyst estimate of $14.38 billion. "This is an incredibly difficult day for Intel as we are implementing some of the most significant changes in our company's history," said Intel CEO Pat Gelsinger in a memo to employees. "In simple terms, we must align our cost structure with our new operating model and fundamentally alter the way we operate. Our revenues have not grown as expected, and we have yet to fully capitalize on powerful trends like AI. Our costs are too high, and our margins are too low." Gelsinger outlined Intel's goal to become a leaner company by focusing on several key priorities, including reducing operating expenses to $17.5 billion by 2025, simplifying its portfolio, and cutting underperforming products. Additionally, Intel plans to integrate its customer success team into the sales and marketing group, among other cost-saving initiatives.

In A Strategic Cross-Cutting Move, Intel Lays Off 15,000 Employees

In his memo to the employees, Intel CEO wrote, "We are announcing significant actions to reduce our costs. We plan to deliver $10 billion in cost savings in 2025, and this includes reducing our headcount by roughly 15,000 roles, or 15% of our workforce. The majority of these actions will be completed by the end of this year." Owing to the second-quarter revenue of $12.8 billion, which was down by 1% year over year (YoY), as a major reason behind cross-cutting, the letter read, "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. We need bolder actions to address both - particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected."