US chip maker Intel has announced plans to reduce its workforce by more than 15 percent in a cost-cutting effort to save $10 billion by 2025. The California-based company will let go of approximately 15,000 employees after reporting a $1.6 billion loss in the April-June period. Revenue also declined by 1 percent to $12.8 billion, falling short of analysts’ expectations.
Intel CEO Pat Gelsinger stated in a memo to staff that the company needs to align its cost structure with its new operating model and make fundamental changes to its operations. The company has not seen expected revenue growth and has not fully benefited from trends such as artificial intelligence. Intel’s costs are too high and margins are too low, prompting the need for bold actions to address these issues.
Following the announcement, Intel’s shares plummeted by 20 percent in extended trading, potentially losing over $24 billion in value when the stock market reopens. The company, once a market leader in chip manufacturing, has struggled to keep up with competitors like Nvidia and AMD in the artificial intelligence market.
Under Gelsinger’s leadership, Intel has shifted its focus to designing advanced AI processors and expanding its manufacturing business. The company has recently halted a major factory expansion project in Israel, citing business conditions and market dynamics.
Intel has also benefited from US President Joe Biden’s efforts to strengthen domestic semiconductor manufacturing, receiving $19.5 billion in grants and loans to build plants in four US states. Despite the challenges faced by the company, Intel remains committed to adapting to the changing market landscape and ensuring its long-term success.
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