Intel has announced a significant downsizing of its workforce, cutting over 15,000 jobs as part of a $10 billion cost savings plan for 2025. This headcount reduction, representing more than 15% of its current workforce of 125,000, is aimed at addressing the company’s financial challenges following a Q2 2024 loss of $1.6 billion.
The company plans to reduce its R&D and marketing expenditures by billions annually through 2026 and decrease capital expenditures by more than 20 percent this year. Intel will also restructure to eliminate non-essential work and review all active projects and equipment to optimize spending. Despite the disappointing financial performance, CEO Pat Gelsinger noted that Intel’s core businesses, particularly PC and server segments, remain profitable.
Intel’s Foundry business, crucial for its future growth, has been a significant source of losses due to heavy investments in new factories and advanced lithography technology. Although the company will receive up to $8.5 billion in funding from the US CHIPS Act, investors remain wary due to Intel’s inconsistent financial performance. The upcoming AI laptop chip, Lunar Lake, is expected to provide some relief but will not be sufficient alone to turn the company’s fortunes around, said CFO David Zinsner. The majority of the announced layoffs will be completed by the end of 2024.
