Intel to lay off 15,000 workers

Intel announced it would lay off greater than 15% of its employees, or 15,000, over the subsequent 30 days. note to employees on Thursday. The massive hiring is an element of a serious plan to cut spending by $10 billion by 2025, after disastrous second quarter profit and forecast report.

“Our revenue has not grown as expected — and we have not yet fully benefited from powerful trends like AI,” CEO Pat Gelsinger said in a note to employees. “Our costs are too high, our margins are too low. We need bolder action to address both of these issues — especially as our financial results and outlook for the second half of 2024 are more challenging than previously expected.”

As Gelsinger describes, Intel has struggled to capitalize on the AI ​​boom in much the identical way as other hardware corporations like Nvidia. Intel led the tech industry revolution around CPUs about 25 years ago, but has been slow to embrace newer waves of computing like smartphones and AI. Gelsinger says Intel’s annual revenue fell by $24 billion between 2020 and 2023, at the same time as its workforce grew by 10% over the identical time-frame. That’s a troublesome sell for other chipmakers within the AI ​​boom, whose revenues and valuations have soared to astronomical heights.

Intel reported a 1% decline in revenue within the second quarter compared to the identical period last 12 months. The company attributed the loss to gross margin headwinds related to AI PC products. The company can be suspending dividend payments to shareholders starting within the fourth quarter of 2024 and is predicting “more challenging” trends within the second half of the 12 months than previously expected.

In addition to the layoffs, Intel will broadly offer applications for a “voluntary separation” program next week to company employees, according to the memo. The company can be announcing a companywide expanded retirement offer for eligible employees.