Intel announces workforce reductions and cost savings

Intel is reducing its workforce by over 15 percent, which means more than 15,000 job cuts from its current 125,000 employees. This action is part of a broader $10 billion cost-saving plan set for 2025. As part of this strategy, the company plans to cut its research and development (R&D) and marketing budgets by billions annually through 2026, reduce capital expenditures by more than 20 percent this year, and restructure its operations to eliminate non-essential work. Additionally, Intel will review all active projects and equipment to ensure that resources are allocated efficiently.

Financial performance and challenges

Intel reported a $1.6 billion loss for Q2 2024, significantly higher than the $437 million loss reported in the previous quarter. CEO Pat Gelsinger noted that the company’s financial performance was disappointing, despite reaching key product and process technology milestones. Revenue for the second quarter was $12.8 billion, a slight decrease of 1 percent year-over-year. However, the Foundry business has been a significant source of financial strain, with operating losses due to investments in new factories and advanced technologies, including extreme ultraviolet (EUV) lithography.

Strategic restructuring and market perception

Intel faces ongoing challenges, including fluctuating financial performance and declining investor confidence. Between Q2 2022 and Q1 2024, Intel's cumulative profit was only $1.1 billion, leading to its designation as the worst-performing tech stock in the S&P 500 in 2024, according to CNBC. In October 2022, Intel initiated layoffs and cost-cutting measures, but these actions only resulted in a modest headcount reduction, with the workforce eventually rebounding to nearly pre-layoff levels by March 2024. Now, Intel is taking more decisive steps, including suspending its dividend and reducing spending, while still prioritizing key investments to support its long-term strategy and strengthen the global semiconductor supply chain.