Intel to Cut Workforce by 15% Amid Financial Losses and Operational Challenges, What the Company Said?

 

San Francisco: Intel announced Thursday that it will reduce its workforce by over 15% as part of a broader effort to streamline operations and cut approximately $20 billion in expenses this year. This decision follows a disappointing financial performance, with the company reporting a $1.6 billion loss for the recently concluded quarter.

Intel's CEO, Pat Gelsinger, acknowledged the disappointing Q2 results despite achieving key product and technology milestones. "Second-half trends are more challenging than we previously expected," Gelsinger noted in an earnings release.

Planned spending reductions are crucial for improving profitability

Chief Financial Officer David Zinsner attributed the earnings shortfall to difficulties ramping up Intel's artificial intelligence PC product and underutilized facility capacity. Zinsner emphasized that the planned spending reductions are crucial for improving profitability and strengthening the company's financial position.

The workforce reduction, which could affect around 18,000 employees based on Intel's year-end 2023 headcount of 124,800, follows the company's decision in June to halt the expansion of a major $15 billion factory project in Israel. Intel explained that large-scale projects often require adjustments based on business conditions and market dynamics.

Intel is positioning itself as a key player in AI

This cost-cutting measure comes just a month after Intel's bold presentation at the Computex expo, where Gelsinger showcased new technologies and emphasized the company's commitment to leading the AI revolution. Despite facing stiff competition from rivals Nvidia, AMD, and Qualcomm, Intel is positioning itself as a key player in AI with new product innovations like the Xeon 6 processors and Lunar Lake chips.

Microsoft also entered the AI space in June with its Copilot+ AI PCs, integrating AI features directly into Windows, which is expected to be a significant trend in the PC market. According to Intel, AI computers could make up 80% of the PC market by 2028, underscoring the growing importance of AI in computing.