Intel to Cut 15,000 Jobs in Major Workforce Reduction
August 2, 2024
Intel has announced a significant reduction in its workforce, laying off 15,000 employees, or more than 15% of its staff. This move is part of a broader strategy to cut spending by $10 billion by 2025, following disappointing second-quarter earnings and a challenging financial outlook.
In a memo to employees, CEO Pat Gelsinger explained, “Our revenues have not met expectations, and we’ve yet to fully capitalize on emerging trends like AI. Our costs are too high, and our margins are too low. We need decisive actions to address these issues, especially given our financial results and the tougher-than-expected outlook for the second half of 2024.”
Despite leading the tech industry in CPU innovation around 25 years ago, Intel has struggled to keep pace with advancements in areas like AI and smartphones. While other hardware companies, such as Nvidia, have thrived during the AI boom, Intel’s annual revenues fell by $24 billion from 2020 to 2023, even as its workforce grew by 10%. This contrasts sharply with the soaring revenues and valuations experienced by other chipmakers during this period.
Intel's second-quarter report revealed a 1% revenue decline compared to the previous year, attributed to margin pressures from its AI PC products. Additionally, the company will suspend its shareholder dividend starting in Q4 2024 and anticipates a more challenging second half of the year.
In addition to the layoffs, Intel will offer a voluntary departure program and an enhanced retirement package for eligible employees next week.
