Intel to cut thousands of jobs to cut costs and bounce back from flat earnings, says report

Chip maker Intel Corporation is likely to announce layoffs for thousands of employees as early as this week, Bloomberg reported, citing sources in the know. The move comes as the tech company looks to cut costs and recover for projected flat Q2 earnings expected on August 1, and market share losses, it added.

The job cuts announcement could come as early as this week, the report added citing people familiar with the company’s plans, who asked not to be identified because the information isn’t public.

A spokesperson for Intel declined to comment, it added.

Workforce Reduction, Cost Cutting

Intel has about 110,000 employees, excluding workers at units that are being spun out. Between October 2022 to December 2023, the chip maker laid off 5 per cent of its employees to 124,800, Bloomberg report added.

The company is also slowing spend in “other areas” and is expected to slash expenses by as much as $10 billion by 2025, it added.

Pat Gelsinger, CEO of Intel is instead intent on driving investment into research and development (R&D) to aimed at improving the company’s technology and helping it return to prominence in the semiconductor industry.

Notably, Intel’s once-dominant position and market share has eroded under Gelsinger’s predecessors as rivals, such as Advanced Micro Devices Inc. (AMD) caught up.

Company Position

Intel shares rose about 1 per cent in late trading, reaching as high as $31.11, on the news.

Meanwhile, chipmakers have sprinted ahead in the development of lucrative semiconductors tailored for demanding artificial intelligence-related (AI) tasks, led by Nvidia Corporation.

Intel is also dealing with uneven demand for chips that run laptops and desktop computers — its main business.

Gelsinger is betting big on the company improving its technology to make up the loss and plans to build factories to manufacture semiconductors for other chipmakers. Last week, Intel hired Naga Chandrasekaran from Micron Technology Inc. as chief global operations officer, putting him in charge of the company’s overall manufacturing efforts.

Further, analysts forecast that Intel will report Q2 revenue as flat, compared to the previous year. Growth will pick up modestly in the second half of 2024, and total sales will increase 3 per cent to $55.7 billion for the full year, according to Wall Street estimates. That would be the first annual revenue increase since 2021.

(With inputs from Bloomberg)