Intel will lay off over 15,000 workers and stop “non-essential work” in response to another quarter of loss
The chip giant reported a loss of US$1.6 billion in the past quarter.
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Photo: Intel
Intel has just announced drastic measures to turn the company around. It announced that it will reduce its workforce by over 15,000 employees over the next few months and will pause all “non-essential work.”
This represents a reduction in its workforce by over 15% and is part of the company’s broader US$10 billion cost savings plan for 2025.
Intel CEO Pat Gelsinger said in a memo to employees:
We have moved our All Company Meeting to today, following our earnings call, as 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 head count by roughly 15,000 roles, or 15% of our workforce. The majority of these actions will be completed by the end of this year.
Intel’s Q2 earnings report was not good. The company reported a loss of US$1.6 billion – substantially more than the US$437 million it lost in the quarter before.
Again, from CEO Pat Gelsinger:
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.
To be fair, Intel's losses mainly stem from its chipmaking Foundry business as it invests heavily to catch up with rivals TSMC. Its PC and server businesses remain profitable.
That said, even those businesses are coming under heavy pressure. PC makers are following Apple’s lead in ditching Intel chips for ARM-based solutions. Microsoft’s consumer Surface Pro and Surface Laptop very recently made the transition to Qualcomm’s new Snapdragon X Elite chips.
To make matters worse, Intel is currently embroiled in a voltage issue concerning its 13 and 14th Gen desktop processors, and that has forced the company to extend warranties for these chips by an additional two years.
Apart from the layoff, Gelsinger also said the company will try to be leaner and simpler by stopping “non-essential work” and “eliminating overlapping areas of responsibility.”
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