Intel, U.S. Chipmaker, Announces 15% Job Cuts
On Thursday, Intel announced that it would reduce its workforce by over 15 percent, affecting approximately 17,500 employees. Additionally, the company will suspend its dividend beginning in the fourth quarter as part of a strategy to revitalize its struggling manufacturing sector.
TroibNews 
Intel announced on Thursday its decision to cut over 15 percent of its workforce, equating to around 17,500 employees, and to suspend its dividend starting in the fourth quarter. This move is part of the company's strategy to revitalize its struggling manufacturing division.
The company also projected third-quarter revenue that fell short of market expectations, influenced by reduced spending on traditional data center semiconductors and a shifting emphasis towards AI chips, where it trails behind competitors.
Following the announcement, shares of Intel, based in Santa Clara, California, plummeted 20 percent in extended trading, threatening a loss of more than $24 billion in market value. This followed a 7 percent drop in the stock on Thursday, coinciding with a broader decline in U.S. chip stocks triggered by a cautious outlook from Arm Holdings on Wednesday.
However, the overall chip industry remained unimpressed by Intel's results. AI leader Nvidia and competitor AMD saw slight gains after hours, highlighting their advantageous positions in the booming AI sector compared to Intel's relative disadvantage.
"I need less people at headquarters, more people in the field, supporting customers," noted CEO Pat Gelsinger when discussing the workforce reduction. Addressing the dividend suspension, he stated: "Our objective is to ... pay a competitive dividend over time, but right now, focusing on the balance sheet, deleveraging."
As of June 29, Intel employed 116,500 people, excluding certain subsidiaries. The majority of the job reductions are expected to be completed by the end of 2024. In April, Intel had announced a quarterly dividend of 12.5 cents per share.
Intel is currently undergoing a turnaround plan aimed at developing advanced AI processors and expanding its contract manufacturing capabilities to regain the technological lead it lost to Taiwan's TSMC, the world's largest contract chipmaker.
The effort to boost its contract manufacturing business under Gelsinger has escalated Intel's expenses and squeezed profit margins. The company has recently announced its intention to implement cost-cutting measures.
Thomas Evans contributed to this report for TROIB News
The company also projected third-quarter revenue that fell short of market expectations, influenced by reduced spending on traditional data center semiconductors and a shifting emphasis towards AI chips, where it trails behind competitors.
Following the announcement, shares of Intel, based in Santa Clara, California, plummeted 20 percent in extended trading, threatening a loss of more than $24 billion in market value. This followed a 7 percent drop in the stock on Thursday, coinciding with a broader decline in U.S. chip stocks triggered by a cautious outlook from Arm Holdings on Wednesday.
However, the overall chip industry remained unimpressed by Intel's results. AI leader Nvidia and competitor AMD saw slight gains after hours, highlighting their advantageous positions in the booming AI sector compared to Intel's relative disadvantage.
"I need less people at headquarters, more people in the field, supporting customers," noted CEO Pat Gelsinger when discussing the workforce reduction. Addressing the dividend suspension, he stated: "Our objective is to ... pay a competitive dividend over time, but right now, focusing on the balance sheet, deleveraging."
As of June 29, Intel employed 116,500 people, excluding certain subsidiaries. The majority of the job reductions are expected to be completed by the end of 2024. In April, Intel had announced a quarterly dividend of 12.5 cents per share.
Intel is currently undergoing a turnaround plan aimed at developing advanced AI processors and expanding its contract manufacturing capabilities to regain the technological lead it lost to Taiwan's TSMC, the world's largest contract chipmaker.
The effort to boost its contract manufacturing business under Gelsinger has escalated Intel's expenses and squeezed profit margins. The company has recently announced its intention to implement cost-cutting measures.
Thomas Evans contributed to this report for TROIB News
