In a strategic move to finance its recovery and address declining market share, Intel plans to cut thousands of jobs, Bloomberg News reported on Tuesday, citing unnamed sources. The announcement has generated a mix of concern and optimism among investors, with Intel’s shares rising about 1% in extended trading despite the stock having plummeted 40% so far this year.
Intel, a longstanding leader in the personal computer and server markets, has faced increasing difficulties in keeping up with the surging demand for chips used in artificial intelligence (AI) applications. CEO Pat Gelsinger, who has been steering the company through a comprehensive turnaround, is focusing on revitalizing Intel’s manufacturing capabilities, investing in cutting-edge chip technologies, and exploring new markets.
The planned layoffs are part of a broader cost-reduction strategy unveiled in October 2022. This initiative aimed to cut annual costs by $3 billion in 2023, with the goal of achieving savings between $8 billion and $10 billion annually by 2025. Regulatory filings indicate that Intel’s workforce was reduced to 124,800 employees at the end of 2023, down from 131,900 the previous year.
Intel’s quarterly results, set to be released on Thursday, are highly anticipated by analysts and investors. Projections indicate that second-quarter revenue will remain relatively flat compared to the same period last year. However, the data center and AI segments are expected to see a significant 23% decline, according to LSEG data.
The job cuts and cost-saving measures are viewed as crucial steps for Intel to regain its competitive edge. The company has been expanding into the foundry business, manufacturing chips for other companies, in an effort to diversify its operations and revenue streams. This move aligns with the broader push by the Biden administration to promote chip manufacturing in North America, aiming to diversify supply chains and reduce reliance on Taiwan.
Intel declined to comment on the Bloomberg report when contacted by Reuters.
As Intel navigates these turbulent times, the tech industry and market analysts will be closely watching the impact of these strategic changes on the company’s performance and its ability to reclaim its position as a leading chipmaker in an increasingly competitive landscape.
