Intel to Cut Thousands of Jobs to Reduce Costs and Fund Turnaround

Intel Corp. is set to eliminate thousands of jobs in a strategic move to reduce costs and fund its ambitious turnaround plan. This decision comes as the company aims to recover from a significant earnings slump and regain lost market share.

Workforce Reduction Announcement

The job cuts, which could be announced as early as this week, are part of Intel’s broader strategy to streamline operations and enhance efficiency. The company currently employs approximately 110,000 people, excluding those in units being spun out. Intel’s second-quarter earnings report is scheduled for Thursday.

CEO Pat Gelsinger’s Vision

Under the leadership of CEO Pat Gelsinger, Intel is heavily investing in research and development to improve its technology and reclaim its position as a leader in the semiconductor industry. Gelsinger’s predecessors saw the company’s dominance wane as competitors like Advanced Micro Devices Inc. (AMD) gained ground. An Intel spokesperson declined to comment on the job cuts.

Market Reaction

Following the news, Intel shares saw a slight increase of about 1%, reaching $31.11 in late trading.

Competitive Landscape

Intel faces stiff competition from other chipmakers, particularly Nvidia Corp., which has advanced in developing high-performance semiconductors for artificial intelligence tasks. Additionally, Intel is addressing fluctuating demand for chips used in laptops and desktop computers, its primary business segment.

Strategic Initiatives

Gelsinger is betting on Intel’s technological advancements and has initiated plans to build factories that will manufacture semiconductors for other companies. Recently, Intel appointed Naga Chandrasekaran from Micron Technology Inc. as the chief global operations officer to oversee the company’s manufacturing efforts.

Previous Workforce Reductions

In 2023, Intel reduced its workforce by about 5%, bringing the total number of employees to 124,800 by the end of the year. These cuts, announced in October 2022, are part of a broader effort to save up to $10 billion by 2025 through various cost-reduction measures.

Financial Outlook

Analysts predict that Intel’s second-quarter revenue will remain flat compared to the previous year. However, growth is expected to pick up in the latter half of 2024, with total sales projected to increase by 3% to $55.7 billion for the full year. This would mark Intel’s first annual revenue increase since 2021.

By focusing on innovation and strategic cost management, Intel aims to navigate its current challenges and emerge stronger in the competitive semiconductor market.