US chipmaker to cut 15% of workforce as part of efforts to reduce costs by $10 billion by 2025.
Chipmaker Intel has announced plans to cut more than 15% of its workforce as it tries to regain ground from rivals such as Nvidia and AMD.
Under the restructuring plan announced on Thursday, the California-based company will eliminate about 15,000 jobs as part of efforts to reduce costs by $10 billion by 2025.
The measure comes after the company recorded a loss of 1.6 billion dollars in the period from April to June, compared to a profit of 1.5 billion dollars a year earlier.
Revenues fell 1% to US$12.8 billion, while forecast revenues of between US$12.5 billion and US$13.5 billion for the period from July to September fell short of analysts’ expectations.
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Intel Corp. CEO Pat Gelsinger said in a memo to employees.
“Our revenues have not grown as expected – and we have not yet fully benefited from powerful trends like AI. Our costs are too high, our margins are too low. We need bolder action to address both – especially given our financial results and the outlook for the second half of 2024, which is more difficult than previously expected.”
Intel shares plunged 20 percent in extended trading, putting the chipmaker on track to lose more than $24 billion in value when the stock market reopens on Friday.
Once the market leader in chips used in everything from laptops to data centers, Intel has struggled to keep pace with Nvidia and AMD amid the artificial intelligence (AI) boom.
Intel announced in June that it would halt expansion of a large manufacturing project in Israel, saying at the time that decisions related to large-scale projects take into account “business conditions, market dynamics and responsible capital management.”
Under Gelsinger, Intel shifted its focus to designing advanced AI processors and bolstering its rental manufacturing business after losing ground to Taiwan’s TSMC.
The company has been a major beneficiary of US President Joe Biden’s efforts to reduce the US economy’s dependence on semiconductor production in Asia by developing the domestic industry.
In March, Biden announced that his administration would provide Intel with $19.5 billion in grants and loans to build semiconductor factories in the states of Arizona, Nevada, Ohio and New Mexico.
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