Intel announced on Thursday that it will cut over 15% of its workforce, amounting to around 18,000 jobs, to optimize operations. This decision comes as part of a plan to reduce expenses by nearly $20 billion this year after reporting a $1.6 billion loss in the most recent quarter. CEO Pat Gelsinger expressed disappointment in the Q2 financial performance despite achieving key product and process technology milestones and noted that the outlook for the second half of the year is more challenging than anticipated.
Chief Financial Officer David Zinsner attributed the second quarter’s profit decline to “headwinds” in ramping up Intel’s AI PC product and underutilized capacity at its facilities. Zinsner stated that the company is taking proactive measures to improve profitability and strengthen its balance sheet by implementing spending reductions. The layoffs are part of these measures, affecting Intel’s workforce, which numbered 124,800 at the end of last year. In June, Intel paused a significant industrial project in Israel, which would have added $15 billion to a chip facility, citing the need to adapt to changing timelines and market conditions.
Intel’s belt-tightening follows its recent assertive stance against strong competition from Nvidia, AMD, and Qualcomm. The company had unveiled new technologies aimed at leading the AI revolution. Although Intel has long dominated the semiconductor market for devices ranging from laptops to data centers, it has recently been surpassed by competitors, especially Nvidia, in specialized AI processors. Intel predicts that AI computers will constitute 80% of the PC market by 2028, according to the Boston Consulting Group.
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