Intel to Lay Off 15K Employees, Cut $10B in Costs

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Facts

  • Pat Gelsinger, chief executive officer of Intel, announced on Thursday that the US chipmaking giant is laying off 15% of its staff — or about 15K employees — by year-end to reduce costs in 2025.[1]
  • In a memo to employees, Gelsinger said that the company — which is 'yet to fully benefit from powerful trends, like AI' — aims to save $10B by next year as it required a massive restructuring after posting $1.6B losses in Q2 this year.[2][3]
  • Intel will also reduce its R&D and marketing spend through 2026, 'stop non-essential work,' and review 'all active projects and equipment' to ensure the company isn't overspending.[4]
  • The maker of Xeon processors also plans a 20% reduction in capital expenditure to between $25B and $27B in 2024, and between $20B and $23B in 2025.[5]
  • In recent years, Intel has reportedly lost primacy in the semiconductor field, failing to ride the artificial intelligence (AI) wave, like rivals AMD and Nvidia Corp.[6]
  • Intel shares declined 19% Thursday following Gelsinger's cost-cutting plan announcement and weak earnings reports that spurred the sell-off on Wall Street.[7][8]

Sources: [1]TechCrunch, [2]Washington Post, [3]Intel, [4]Verge, [5]The Register, [6]Bloomberg, [7]Guardian and [8]Yahoo Finance.

Narratives

  • Narrative A, as provided by The Economic Times. Intel's layoff plan is undoubtedly painful, but that will save the company $10B by next year. This is necessary to recalibrate Intel's course for the future and protect employment at the company as a whole. The chipmaker remains committed and focused on innovation and AI. Such streamlining is a long time coming and will ensure it continues to lead the technology sector.
  • Narrative B, as provided by Ctech. Intel is grappling with declining revenues and profits amid the rise of companies like Nvidia in the AI chip market. It plans to pivot towards developing a foundry business to produce chips for other companies, but this strategy requires massive investment. Laying off thousands of employees alone may not be enough to turn Intel's fortunes around.

Predictions