US chipmaker Intel said on Thursday it will cut more than 15 percent of its workforce to streamline operations.
The plan to cut spending by about $20 billion this year comes at a time when Intel reported a loss of $1.6 billion in the recently ended quarter.
“Our second quarter financial performance was disappointing, even though we made significant achievements in product and process technology,” Intel Chief Executive Officer Pat Gelsinger said in an earnings release.
“Second half trends are more challenging than we previously expected.”
Second-quarter earnings were negatively impacted by hurdles in expanding Intel’s artificial intelligence PC product and unused capacity at its facilities, according to Chief Financial Officer David Zinsner.
“By implementing reductions in our expenses, we are taking proactive steps to improve our profitability and strengthen our balance sheet,” Zinsner said.
Intel reported at the end of last year that it had 124,800 employees, meaning about 18,000 positions could be cut.
In June, Intel announced it was halting the expansion of a major factory project in Israel, which would have seen an additional $15 billion invested in a chip plant.
Intel said at the time that “managing large-scale projects, especially in our industry, often involves adapting to changing timelines.”
“Decisions are based on business conditions, market dynamics and responsible capital management,” the US company said.
The cuts come just a month after Intel fended off tough challenges from rivals Nvidia, AMD and Qualcomm and unveiled technologies it said would lead the artificial intelligence revolution.
For decades, Intel has dominated the market for chips that power everything from laptops to data centers. But in recent years, its competitors — particularly Nvidia — have pulled ahead in specialized AI processors.
During a keynote address at Taiwan’s Computex expo, Gelsinger introduced Intel’s latest Xeon 6 processors for servers, and shared more details about the next-generation Lunar Lake chips for AI PCs.
“AI is driving one of the most significant eras of innovation the industry has ever seen,” Gelsinger said.
“The magic of silicon is once again enabling rapid advances in computing, which will push the limits of human capability and power the global economy for years to come.”
Gelsinger said Intel’s latest devices offer the best mix of performance, energy efficiency and affordability.
His presentation was preceded by keynote speeches from Nvidia chief Jensen Huang, AMD CEO Lisa Su, and Qualcomm’s Cristiano Amon — and they were filled with claims and counterclaims about which company’s products were best for AI.
Microsoft in June unveiled its Copilot+ AI PC, which will have artificial intelligence features built into the Windows operating system.
Along with Microsoft, some of the world’s largest computer manufacturers, including Dell, HP, Samsung and Lenovo, will also be adding these features, offering AI capabilities not only via the internet, but also on the device itself.
AI computers are expected to account for 80 percent of the PC market by 2028, Intel said, citing the Boston Consulting Group.
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