Intel Corp. told employees Thursday that 15,000 of them would be let go — amounting to 15% of its workforce — as the tech company struggles to regain a foothold amid disappointing results and a revenue drop that saw its stock price fall more than 20% in after-hours trading.
The layoffs stem from the need to “align our cost structure with our new operating model and fundamentally change the way we operate,” Intel CEO Pat Gelsinger wrote in a memo to employees posted to the chipmaker’s website.
Gelsinger cited lower-than-expected revenues and a lag in benefits from tech trends such as artificial intelligence. While second-quarter revenue was $12.8 billion, that was $1.6 billion less than the same period last year, a 1% drop.
Gelsinger said the company is planning to save $10 million in 2025.
The job cuts will start with an “enhanced retirement offering” for those eligible, as well as a voluntary buyout option for other employees.
“I believe that how we implement these changes is just as important as the changes themselves, and we will adhere to Intel values throughout this process,” Gelsinger wrote.
The company will also suspend its fourth-quarter dividend, Gelsinger said in remarks during the earnings call.
“By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet,” Chief Financial Officer David Zinsner told investors. “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.”
Analysts were not so sure.
“Intel’s announcement of a significant cost-cutting plan including layoffs may bolster its near-term financials, but this move alone is insufficient to redefine its position in the evolving chip market,” eMarketer analyst Jacob Bourne said. “The company faces a critical juncture as it leverages U.S. investment in domestic manufacturing and the surging global demand for AI chips to establish itself in chip fabrication.”
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