Intel, the world’s largest chipmaker, has unveiled a sweeping $10 billion cost savings plan that includes cutting over 15,000 jobs, representing approximately 15 percent of its global workforce. Meanwhile, the administration is set to hand over $8.5 billion as part of the CHIPS act designed to create high tech jobs.
The Verge reports that Intel CEO Pat Gelsinger announced the significant restructuring in a memo to employees, acknowledging the “painful news” and the challenging road ahead for the company. The layoffs come as Intel grapples with disappointing financial performance, reporting a $1.6 billion loss in Q2 2024, a substantial increase from the $437 million loss in the previous quarter.
Despite hitting key product and process technology milestones, Intel’s revenues have not grown as expected, and the company has yet to fully capitalize on emerging trends like AI. Gelsinger admitted, “Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI.”
As part of the cost-cutting measures, Intel plans to reduce its R&D and marketing spend by billions each year through 2026. Additionally, the company will slash capital expenditures by more than 20 percent this year and restructure to eliminate non-essential work. Intel will also review all active projects and equipment to ensure it is not overspending.
While Intel’s chipmaking Foundry business has been a major source of losses, with $7 billion in operating losses in 2023 and another $2.8 billion in the latest quarter, the company’s products themselves remain profitable. Almost all the recent losses can be attributed to the Foundry division, while sales remain relatively stable, and the PC and server businesses continue to be profitable.
Despite the challenges, Intel is set to receive up to $8.5 billion in US government funding through the CHIPS Act. However, investors have expressed discontent with the company’s performance, with Intel becoming the worst-performing tech stock in the S&P 500 this year, according to CNBC.
Intel's 15,000 layoffs, citing "margins are too low," comes five months after the Biden administration's CHIPS Act gave it an $8.5 billion gift, $11 billion in favorable loans, and $25 billion in tax cuts, on the promise to hire 10,000 people.https://t.co/qB4a2oapAl https://t.co/wWNUZeIXQq pic.twitter.com/5GVtY9M029
— Y Disassembler (@loomdoop) August 2, 2024
Intel faces stiff competition in the AI server chip market from companies like Nvidia and AMD, and its recent entry into graphics has yet to make a significant impact. The company has also had to overhaul its flagship laptop chips to address the threat of Arm chips from competitors like Qualcomm and Apple, which offer better battery life.
Read more at the Verge here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
