Intel’s on a long, long road to recovery, and over 15,000 workers will no longer be coming along for the ride. The chipmaker just announced it’s downsizing its workforce by over 15 percent as part of a new $10 billion cost savings plan for 2025, which will mean a headcount reduction of greater than 15,000 roles, Intel tells The Verge. The company currently employs over 125,000 workers, so layoffs could be as many as 19,000 people.
Intel will reduce its R&D and marketing spend by billions each year through 2026; it will reduce capital expenditures by more than 20 percent this year; it will restructure to “stop non-essential work,” and it’ll review “all active projects and equipment” to make sure it’s not spending too much.
“This is painful news for me to share. I know it will be even more difficult for you to read,” reads part of a memo from Intel CEO Pat Gelsinger to staff, which you can also read in full at the bottom of this post.
The company just reported a loss of $1.6 billion for Q2 2024, substantially more than the $437 million it lost last quarter. “Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones,” admitted Gelsinger in the company’s press release. “Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI,” he writes in his employee memo.
Second quarter revenue was $12.8 billion, down just 1 percent year over year, and it’s not like all of Intel’s businesses are failing. While Intel has absolutely been losing money on its chipmaking Foundry business as it invests in new factories and extreme ultraviolet (EUV) lithography, to the tune of $7 billion in operating losses in 2023 and another $2.8 billion this quarter, the company’s products themselves aren’t unprofitable.
Almost all the losses this quarter and last quarter came from Foundry, while its sales continue to stay relatively stable and its PC and server businesses stay profitable. (The PC sales slump ended earlier this year.) The company is also set to receive up to $8.5 billion in US government funding from the CHIPS Act.
But investors didn’t seem happy that the company kept itself on a knife’s edge: over the past two years, before this quarterly loss, it had continued to swing between losses and profits overall, for just $1.1 billion in cumulative between Q2 2022 and Q1 2024. “Intel is now the worst-performing tech stock in the S&P 500 this year,” CNBC wrote in April.