Intel Announces Massive Layoffs: 15,000 Jobs to be Cut Amid Financial Struggles

Chipmaker Intel to cut 15,000 jobs | BreakingNews.ie

Chipmaker Intel says it is cutting 15% of its workforce -- about 15,000 jobs -- as it tries to turn its business around to compete with more successful rivals like Nvidia and AMD. In a memo to staff, Intel Corp chief executive Pat Gelsinger said the company plans to save 10 billion dollars in 2025. "Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate," he wrote in the memo published on Intel's website. "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." The job cuts come on the heels of a disappointing quarter and forecast for the iconic chip maker founded in 1968 at the start of the PC revolution. Next week, Mr Gelsinger wrote, Intel will announce an "enhanced retirement offering" for eligible employees and offer an application program for voluntary departures. "These decisions have challenged me to my core, and this is the hardest thing I've done in my career," he said. The bulk of the layoffs are expected to be completed this year. The Santa Clara, California-based company is also suspending its stock dividend as part of a broader plan to cut costs. Intel reported a loss for its second quarter along with a small revenue decline, and it forecast third-quarter revenues below Wall Street's expectations. Its stock plunged 19% in after-hours trading, indicating that Intel could lose roughly 24 billion dollars (£18.8 billion) of its market value when the stock market opens Friday. The company posted a loss of 1.6 billion dollars (£1.25 billion) or 38 cents per share, in the April-June period. That's down from a profit of 1.5 billion dollars (£1.17 billion), or 35 cents per share, a year earlier. Adjusted earnings excluding special items were 2 cents per share.

Intel unveils plans to axe 15% of workforce in cost saving initiative

The company also issued a revenue warning for the third quarter of the year, revealing that it was planning to focus more on artificial intelligence semiconductors, instead of traditional data centre ones in the coming months. Tech giant Intel recently revealed that it would be cutting more than 15% of its total workforce, as well as stopping its dividend in the last quarter of this year. This move comes in an attempt to implement a new strategy aimed at boosting the company's loss-making manufacturing arm. The cost reduction plan worth about $10bn (€9.25bn) is expected to lay off approximately 17,500 employees globally, with most posts due to be cut by the end of this year. Apart from a decreasing the staff headcount, the plan will also focus on building a sustainable financial model to speed up profitable growth. This will include reducing capital and operating expenses, as well as the cost of sales. However, the company has revealed that it plans to maintain its core investments. Regarding the dividend suspension, Intel reconfirmed that although it is committed to a competitive dividend in the long-term, at the moment, its focus is on deleveraging its balance sheet. This restructuring plan also comes as Intel has been struggling recently due to the US revoking some export licences, restricting it from selling certain semiconductor chips to Chinese clients such as Huawei. Back in May this year, Intel also warned that this decision would impact its revenues in the second quarter. The company released its second quarter earnings on Thursday, reporting a revenue of $12.8bn (€11.83bn) for the quarter, which was a 1% decrease from Q2 2023. The gross margin was 35.4% in Q2 2024, down from 35.8% in the second quarter of 2023. Intel also reported $2.3bn in cash from operations for the second quarter of the year, and paid $0.5bn in dividends during this period. It also issued a revenue warning for the third quarter of the year. Intel now estimates Q3 2024 revenue to be somewhere between $12.5bn and $13.5bn. If so, this would be well below market expectations of $14.35bn, according to analysts polled by the London Stock Exchange Group (LSEG). The company now expects an adjusted gross margin of 38% for the third quarter of the year, which would also miss market estimates of 45.7%. This revenue warning is mainly due to the company wanting to focus more on artificial intelligence semiconductors, in order to catch up on its competitors in the coming months, rather than on traditional data centre chips. In a statement, Intel CEO Pat Gelsinger said: "Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones. "Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation." David Zinsner, chief financial officer (CFO) of Intel said, "Second-quarter results were impacted by gross margin headwinds from the accelerated ramp of our artificial intelligence PC product, higher than typical charges related to non-core businesses, and the impact from unused capacity. "By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet. We expect these actions to meaningfully improve liquidity and reduce our debt balance while enabling us to make the right investments to drive long-term value for shareholders."

Chipmaker Intel to cut 15,000 jobs in effort to cut costs | BreakingNews.ie

Chipmaker Intel says it is cutting 15% of its workforce -- about 15,000 jobs -- as it tries to turn its business around to compete with more successful rivals like Nvidia and AMD. It's unclear how many jobs will be affected at the firm's Irish operations, largely based in Leixlip, Co Kildare. In a memo to staff, Intel Corp chief executive Pat Gelsinger said the company plans to save $10 billion (€9.25 billion) in 2025. "Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate," he wrote in the memo published on Intel's website. "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." The job cuts come on the heels of a disappointing quarter and forecast for the iconic chipmaker founded in 1968 at the start of the PC revolution. Next week, Mr Gelsinger wrote, Intel will announce an "enhanced retirement offering" for eligible employees and offer an application program for voluntary departures. "These decisions have challenged me to my core, and this is the hardest thing I've done in my career," he said. The bulk of the layoffs are expected to be completed this year. The Santa Clara, California-based company is also suspending its stock dividend as part of a broader plan to cut costs. Intel reported a loss for its second quarter along with a small revenue decline, and it forecast third-quarter revenues below Wall Street's expectations. Its stock plunged 19% in after-hours trading, indicating that Intel could lose roughly $24 billion of its market value when the stock market opens Friday. The company posted a loss of €1.6 billion in the April-June period. That's down from a profit of $1.5 billion a year earlier. Adjusted earnings excluding special items were 2 cents per share.

Intel Announces Layoffs of Over 15.000 Employees Amidst Financial Struggles

Yesterday we reported that Intel could fire 10.000 people from its workforce, today the news is even worse, it's 15.000 aka 15% of their workforce. The company cites continued disappointing sales as the primary reason. Recent years have seen Intel facing numerous setbacks, including partially defective processors that have frustrated many customers. The latest quarterly report reveals a decline in revenue, with second-quarter sales amounting to $12.8 billion, a 1% decrease compared to the previous year. Consequently, Intel has decided to cut 15% of its jobs, impacting nearly 19,000 employees out of its current workforce of just over 125,000. The layoffs are part of a broader cost-cutting initiative that Intel aims to complete by 2025. The company plans to save a total of $10 billion next year, primarily by streamlining operational business. This will affect research and development, marketing, and administrative positions. Additionally, Intel will suspend dividend payments to shareholders in the fourth quarter of 2024. Following the announcement, Intel's share price fell by another 2%, marking a total decline of 37% since the beginning of the year. Intel also plans to reduce capital expenditure by approximately 20%. This will be achieved by ending the "five nodes in four years" plan. The company aims to produce a new generation of chips using the 18A process, with Panther Lake mentioned as the first client chip to Looking ahead, Intel plans to focus on selling more AI-capable processors for Copilot+ PCs. Current Intel chips are already compatible with these features, and the first Copilot notebooks with AI capabilities and a separate NPU are expected by the end of 2024.

Intel confirms plans to lay off 15,000 employees following poor 2024 performance

Intel has confirmed plans to lay off 15% of its workforce, totalling around 15,000 employees, confirming previous speculation. The decision follows a disappointing second quarter and is part of a broader strategy to achieve $10 billion in cost savings by 2025. Intel CEO Pat Gelsinger shared the news in a letter to employees, highlighting the urgent need to align the company's cost structure with its new operating model. "Our revenues have not grown as expected... Our costs are too high, our margins are too low," Gelsinger said, adding the company needed "bolder actions" in order to address challenges like a "tougher than previously expected" second half to the year and the fact that the company has not yet benefitted from the AI trend. Despite an increase of around 10% to its workforce since 2020, Intel's annual revenues have declined by a concerning $24 billion. The company's most recent earnings revealed a 1% decline in revenues compared to the previous year, attributed to gross margin headwinds relating to its AI PC products. Intel's revenue for the three months ending June 29 stood at $12.8 billion. The CEO added: "Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones." David Zinsner, Intel's CFO, commented: "By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet." In addition to the layoffs, Intel will offer a voluntary departure program and an enhanced retirement package for eligible employees. TechRadar Pro has reached out again for further information on how affected workers will be supported.

Intel to fire over 17,000 employees, suspend dividend as growth stalls

Intel said on Thursday (Aug 1) it would cut more than 15 per cent of its workforce, some 17,500 people, and suspend its dividend starting in the fourth quarter as the chipmaker pursues a turnaround focused on its money-losing manufacturing business. It also forecast third-quarter revenue below market estimates, grappling with a pullback in spending on traditional data centre semiconductors and a focus on AI chips, where it lags behind rivals. Shares of Santa Clara, California-based Intel slumped 20 per cent in extended trade, setting the chipmaker up to lose more than $24 billion in market value. The stock had closed down seven per cent on Thursday, in tandem with a plunge in US chip stocks after a conservative forecast from Arm Holdings on Wednesday. The results did not rock the broader chip industry. AI powerhouse Nvidia and smaller rival AMD ticked up after hours, underscoring how well-positioned they were to take advantage of the AI boom, and Intel's relative disadvantage. "I need less people at headquarters, more people in the field, supporting customers," CEO Pat Gelsinger told Reuters in an interview, talking about the job cuts. On the dividend suspension, he said: "Our objective is to ... pay a competitive dividend over time, but right now, focusing on the balance sheet, deleveraging." Intel, which employed 116,500 people as of June 29, excluding some subsidiaries, said the majority of the job cuts would be completed by the end of 2024. In April, it declared a quarterly dividend of 12.5 cents per share. Intel is in the middle of a turnaround plan, focused on developing advanced AI processors and building-out its for-hire manufacturing capabilities, as it aims to recoup the technological edge it lost to Taiwan's TSMC, the world's largest contract chipmaker. The push to energize that contracting foundry business under Gelsinger has increased Intel's costs and pressured profit margins. More recently, the chipmaker has said it will cut costs. On Thursday, Intel announced it would cut operating expenses and reduce capital expenditure by more than $10 billion in 2025, more than it initially planned. "A $10 billion cost reduction plan shows that management is willing to take strong and drastic measures to right the ship and fix problems. But we are all asking, 'is it enough' and is it a bit of a late reaction considering that CEO Gelsinger has been at the helm for over three years?" said Michael Schulman, chief investment officer of Running Point Capital. The company had cash and cash equivalents of $11.29 billion, and total current liabilities of about $32 billion, as of June 29. Intel's lagging position in the market for AI chips has sent its shares down more than 40 per cent so far this year. For the third quarter, Intel expects revenue of $12.5 billion to $13.5 billion, compared with analysts' average estimate of $14.35 billion, LSEG data showed. It forecast adjusted gross margin of 38 per cent, well short of market expectations of 45.7 per cent. Analysts believe Intel's plan to turn around the foundry business will take years to materialize and expect TSMC to maintain its lead in the coming years, even as Intel has ramped up production of AI chips for personal computers. The PC chip business grew nine per cent in the April-June quarter. "The irony is that their first AI PC-focused processors are selling much better than expected. The problem is that the costs for those chips are much higher, meaning their profitability on them isn't great," said Bob O'Donnell, chief analyst at TECHnalysis Research. "In addition, the data centre decline reinforces the fact that while companies are buying lots of infrastructure for AI, the vast majority is for non-Intel GPUs," he said, referring to graphic processing units like those sold by Nvidia. Intel's data centre business declined three per cent in the quarter. Also read | WION Business Wrap | Intel's plan to overtake TSMC, Struggles of US natural gas producers and more CFO David Zinsner said on a post-earnings call that the chipmaker expects weaker consumer and enterprise spending in the current quarter, especially in China. Export licenses that were revoked in May also hurt Intel's business in China in the second quarter, he said. Intel said in May its sales there would take a hit after Washington revoked some of the chipmaker's export licenses for a customer in China. Intel is also slashing investments. It expects to cut capital expenses by 17 per cent in 2025 year-on-year to $21.5 billion, calculated on the midpoint of a range the chipmaker forecast. It expects these costs to stay roughly flat in 2024.

Intel to lay off over 17,000 people as shares plummet

Paid parking in Dubai: Residents face up to Dh4,000 extra yearly costs when new rates kick in Intel said on Thursday it would cut more than 15 per cent of its workforce and suspend its dividend starting in the fourth quarter as the chipmaker pursues a turnaround centred around its loss-making manufacturing business. The layoffs will impact roughly 17,500 people. Intel, which employed 116,500 people as of June 29, excluding some subsidiaries, said the majority of the job cuts would be completed by the end of 2024. The company also forecast third-quarter revenue below estimates, grappling with a pullback in spending on traditional data centre semiconductors and a focus on AI chips, where it lags rivals. Shares of Santa Clara, California-based Intel slumped 20 per cent in extended trade, setting it up to lose more than $24 billion in market value. The stock had closed down 7 per cent on Thursday, in tandem with a plunge in US chip stocks after a conservative forecast from Arm Holdings on Wednesday. The results did not rock the broader chip industry. AI powerhouse Nvidia and smaller rival AMD ticked up after hours, underscoring how well-positioned they were to take advantage of the AI boom. "I need less people at headquarters, more people in the field, supporting customers," CEO Pat Gelsinger told Reuters in an interview. On the dividend suspension, he said: "Our objective is to ... pay a competitive dividend over time, but right now, focusing on the balance sheet, deleveraging." The company also announced it would cut operating expenses and reduce capital expenditure by more than $10 billion in 2025, more than it initially planned. "A $10 billion cost reduction plan shows that management is willing to take strong and drastic measures to right the ship and fix problems. But we are all asking, 'is it enough' and is it a bit of a late reaction considering that CEO Gelsinger has been at the helm for over three years?" said Michael Schulman, chief investment officer of Running Point Capital. He said eliminating the dividend may further pressure the shares in the short- to medium-term, because it would knock Intel out of any ETFs, indices, and fund strategies that only include dividend payers. The company had cash and cash equivalents of $11.29 billion, and total current liabilities of about $32 billion, as of June 29. Much of Wall Street's focus has centered around the heavy investments and huge costs incurred by Intel as it builds-out its manufacturing capacity in a bid to compete against Taiwanese contract chipmaking behemoth TSMC. Intel's lagging position in the market for AI chips has sent its shares down more than 40 per cent so far this year.