After reporting a Net loss of $1.6 billion for Q2 2024, Intel is aiming to cut costs by $10 billion until next year. On Thursday, the tech giant announced layoffs affecting more than 15,000 people, about 15% of Intel's current workforce.
In one Thursday's memo To staff, Intel CEO Pat Gelsinger said that revenue had not grown as much as expected and that Intel had “still taken full advantage of powerful trends, like AI.”
“Our costs are too high, our margins are too low,” Gelsinger wrote.
Intel's new plan includes reorganizing its businesses and narrowing its focus on the projects with the biggest impact. The company will “reduce layers, eliminate overlapping areas of responsibility” and “stop non-essential work,” according to the memo. Gelsinger gave the example of bringing the customer success team into the sales, marketing and communications group.
“This is a difficult day for all of us and there will be more difficult days ahead,” Gelsinger wrote. “But as difficult as all of this is, we are making the necessary changes to build on our progress and usher in a new era of growth.”
He also mentioned that most of the layoffs will happen by the end of the year.
Intel CEO Pat Gelsinger. Photo: Annabelle Chih/Bloomberg via Getty Images
One of Intel's goals is to bring “AI Everywhere” AI products, incl AI PC, for a wider audience. The company also wants to expand manufacturing capabilities in the US and EU.
Intel has already cut staff by about 5,000 from March to June, but these holidays are are not included in the new reduction of 15%.
When it comes to AI chip market share, Intel lags behind industry leader Nvidia. Bank of America analysts Intel will have less than 1% of the market, compared to Nvidia's 70% to 95%.
Intel was in decline 55% year to date at the time of writing.