Intel says it will cut about 19,000 jobs to save $10 billion a year: The story in 5 points
These layoffs come at a time when Intel’s quarterly performance was weaker than expected and the company’s guidance for the current quarter was also weak.
Intel has been in the news for the past few weeks for laying off employees and cutting jobs. In a recent press release, the computer chip industry leader claimed that Intel’s revenue in the second fiscal quarter that ended on June 29 dropped by 1 percent compared to the same period last year. And thus, the company decided to cut 15 percent of jobs, impacting about 17,500 people. But why is this happening, and will the layoffs help? Let’s look at the story in 5 points.
– Intel’s Q2 2024 financial report revealed a staggering $1.6 billion loss, widening from the previous quarter’s $437 million loss. CEO Gelsinger expressed disappointment, citing revenue expectations not being met and the company’s inability to fully capitalize on promising trends like AI despite achieving significant technological advancements.
– Intel has unveiled a major cost-saving plan that aims to reduce expenses by $10 billion by 2025, which will include a significant reduction in the number of employees by more than 15 percent. This could mean layoffs of 15,000 to 19,000 employees, a significant reduction effort considering the company’s current workforce of more than 1,25,000 people.
– Intel plans to significantly cut costs by reducing research and development, as well as marketing expenses, by billions of dollars annually by 2026. The company is also cutting investments. It expects to cut capital expenditures by 17 percent year-on-year to $21.5 billion in 2025, calculated at the midpoint of the range forecast by the chipmaker. It expects these costs to remain roughly stable in 2024.
– Additionally, the company will reduce capital expenditure by more than 20 percent this year, streamline operations by eliminating non-essential projects, and conduct a thorough review of all ongoing initiatives and tools to ensure efficient resource allocation.
– Intel finance chief Dave Zinsser revealed that the company is accelerating the transfer of Intel 4 and 3 chip wafer production from its Oregon plant to a plant in Ireland. Although the move will increase costs in the near term, it is expected to increase gross margins in the long run, the report noted. CNBC,
