Intel Announces Workforce Reduction as Part of Turnaround Strategy

Intel Announces Major Job Cuts as Part of Turnaround Strategy

In a significant move aimed at revitalizing its operations, Intel, the renowned Silicon Valley chip manufacturer, revealed on Thursday its plan to reduce its workforce by over 15,000 jobs. This decision comes as the company seeks to navigate a challenging landscape following a series of setbacks.

The impending job cuts represent approximately 15 percent of Intel’s total workforce. In addition to the workforce reduction, Intel has disclosed a series of restructuring initiatives and a planned decrease in capital expenditures. Together, these measures are anticipated to yield cost savings of around $10 billion by the year 2025. To further preserve cash flow, the company announced the suspension of its quarterly dividend for the fourth quarter.

In a heartfelt message to employees, Patrick Gelsinger, Intel’s Chief Executive Officer, expressed the gravity of the situation: “This is painful news for me to share. I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history.” Following the announcement, Intel’s stock experienced a sharp decline, falling over 20 percent in after-hours trading.

Intel, which is best known for manufacturing microprocessor chips that function as the electronic brains in a vast majority of computers, has encountered significant challenges amid fierce competition in the rapidly evolving chip market, particularly in segments related to artificial intelligence. This marks a significant moment for the company, as its last major restructuring effort occurred in 2016, when it announced plans to eliminate up to 12,000 jobs, or 11 percent of its workforce.

Since taking the helm in early 2021, Gelsinger has been on a mission to rejuvenate Intel. Among his key initiatives, he has actively lobbied for federal subsidies to promote increased domestic production of essential semiconductor components. Additionally, he has focused on resolving the manufacturing challenges that have plagued the company. Unlike many of its competitors, Intel not only designs chips but also manufactures them in-house, while others predominantly depend on external production services known as foundries, with the majority turning to Taiwan Semiconductor Manufacturing Company.