To address its financial challenges, Intel has announced plans to lay off over 15,000 employees, representing approximately 15% of its workforce. This initiative is part of a broader strategy to save $10 billion by 2025. The number of job cuts could potentially reach up to 19,000.
Financial Struggles and Strategic Adjustments
Intel’s decision comes in the wake of a disappointing financial performance in the second quarter of 2024. The company reported a loss of $1.6 billion, a sharp increase from the $437 million loss in the previous quarter. Revenue for the second quarter stood at $12.8 billion, marking a 1% decline year-over-year.
This is not the first instance of significant layoffs at Intel. In October 2022, the company also reduced its workforce, announcing annual cost cuts between $8 billion and $10 billion until 2025. The employee count dropped by approximately 5% in 2023, from 131,900 to 124,800.
CEO’s Message to Employees
Intel’s CEO, Pat Gelsinger, conveyed the difficult news to employees in a heartfelt message. “It is a painful message for me to share. I know it will be even more difficult for you to read,” Gelsinger wrote. He acknowledged the company’s underwhelming financial performance despite achieving key product and process technology milestones. “Our revenues have not grown as expected, and we are not yet fully benefiting from strong trends such as artificial intelligence,” he added.
Gelsinger highlighted the need for bold actions given the challenging financial results and the tougher-than-expected outlook for the latter half of 2024. He emphasized the importance of fostering a culture of honesty, transparency, and respect during this period of transition.
Upcoming Measures
In the coming weeks, Intel will introduce an enhanced company-wide retirement offer for eligible employees and a voluntary departure program. Gelsinger explained the urgency of the layoffs, pointing out that Intel’s current cost structure is not competitive. He noted that while annual revenues in 2020 were about $24 billion higher than last year, the workforce is now 10% larger. “There are many reasons for this, but it is not a sustainable path forward,” he stated.
Looking Forward
These workforce reductions and cost-saving measures are crucial steps for Intel as it seeks to realign its operations and regain financial stability. The company’s ability to adapt to evolving market conditions and leverage emerging trends like artificial intelligence will be pivotal in shaping its future trajectory.
As Intel navigates these challenging times, the focus remains on ensuring a transparent and respectful transition for its employees, while strategically positioning itself for long-term success in a competitive industry.
