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Intel is set to lay off about 15,000 employees as part of a newly implemented $10 billion cost-saving initiative.
In a communication to its employees following the Q2 2024 earnings call, company CEO Pat Gelsinger announced that these job cuts will affect 15% of its workforce, with most layoffs expected to be completed by year-end.
Gelsinger highlighted that Intel’s cost structure is currently “not competitive.” He pointed out that while the company’s revenue in 2020 was $24 billion higher than the previous year, the workforce has actually increased by 10% since then.
As part of the restructuring, Intel plans to extend a “company-wide enhanced retirement offering” to eligible employees and introduce an application program for voluntary departures.
“Challenging” Future
“This is a difficult announcement for me to make,” Gelsinger expressed. “I understand it will be even more challenging for you to receive. Today is a tough day for Intel as we embark on some of the most significant changes in our company’s history.”
He continued, “Simply put, we need to align our cost structure with our new operating model and fundamentally overhaul our operations. Our revenues have not met expectations, and we have yet to fully capitalize on important trends like AI.
“Our costs are too high, and our margins are too low. We must take decisive action to address both of these issues, especially given our financial performance and outlook for the second half of 2024, which is more challenging than anticipated.”
During Q2, Intel reported a 1% year-over-year drop in revenue to $12.8 billion. The company also recorded a $1.6 billion loss for the quarter, compared to a $1.5 billion profit in Q2 2023.
“The second quarter results were affected by gross margin pressures from the accelerated launch of our AI PC product, higher charges related to non-core businesses, and the impact of unused capacity,” explained Intel CFO David Zinsner.
