Intel to shed at least 15% of staff to drive down costs

Intel plans to lay off over 16,000 employees, representing at least 15% of its workforce, as part of a strategy to reduce costs and improve financial stability. The layoffs are expected to be completed by the end of 2024 and will affect various divisions, including research and development, marketing, and administrative roles. The company aims to cut capital expenditures by more than 20%, reducing spending to between $25 billion and $27 billion in 2024, with further cuts anticipated in 2025. Additionally, Intel will suspend its quarterly dividend starting in Q4 to prioritize liquidity for necessary investments.

In its second-quarter earnings report, Intel reported a loss of $1.6 billion on revenues of $12.8 billion, a decline from a profit of $1.5 billion in the same period last year. The company's share price fell nearly 20% following the announcement of the layoffs and financial losses. CEO Pat Gelsinger acknowledged disappointing profitability and warned of a challenging third quarter, with revenue forecasts indicating a potential decline.

To enhance its manufacturing capabilities, Intel will outsource more chip production to TSMC while it prepares its internal processes for future production. This shift is expected to continue through much of 2025. Despite these challenges, Intel's personal computing segment showed some growth, with revenues increasing by 9% year-on-year, driven by the launch of AI PCs.