Intel Cutting More Than 15K Jobs Despite Getting Billions from the US Government

Intel announced it will cut over 15,000 jobs, representing 15 percent of its workforce, as part of a cost-cutting strategy amid disappointing financial results. This decision comes despite receiving $8.5 billion from the US government to support its chipmaking operations under the CHIPS Act. Intel's revenue declined by 1 percent year-on-year in the second quarter, prompting CEO Pat Gelsinger to describe the layoffs as difficult but necessary. The job cuts will primarily affect sales, marketing, and administrative roles, following a previous 5 percent reduction in staff last year.

Intel is attempting to pivot its business model to focus on foundry services and advanced manufacturing techniques, aiming to become the second-largest foundry by 2030. The government funding will be used to build new plants in several states, which is expected to create thousands of jobs in construction and supporting industries. Despite the layoffs, analysts suggest that the targeted nature of the cuts indicates a strategic approach rather than a sign of overall company failure.

Intel has struggled to maintain its market position, particularly against competitors like Nvidia and TSMC, as the industry shifts towards AI and data center computing. The US government views the semiconductor sector as vital for economic and national security, especially in light of the pandemic's impact on global supply chains.