The Crossbill News Desk
Intel on Thursday (August 1), announced it would reduce its workforce by over 15%, amounting to approximately 15,000 employees, and suspend its dividend beginning in the fourth quarter. The move is part of its strategy to revitalize its struggling manufacturing division.
Additionally, Intel projected third-quarter revenue to fall short of market expectations due to decreased spending on traditional data center semiconductors and a shift toward AI chips, where the company is currently behind its competitors.
Shares of Intel, based in Santa Clara, California, dropped 20% in after-hours trading, positioning the chipmaker to potentially lose over $24 billion in market value. The stock had already fallen 7% on Thursday, following a broader decline in US chip stocks triggered by a cautious forecast from Arm Holdings the day before.
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Intel Corp CEO Pat Gelsinger stated in a memo to employees, Al Jazeera reported.
“Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected,” he added.
Previously a leader in chips for devices ranging from laptops to data centers, Intel has struggled to keep up with Nvidia and AMD in the midst of the AI boom.
In June, Intel announced it would pause the expansion of a significant factory project in Israel, citing that such decisions are influenced by "business conditions, market dynamics, and responsible capital management."
The company has significantly benefited from US President Joe Biden's initiatives to reduce the US economy's dependence on semiconductor manufacturing in Asia by bolstering the domestic industry.
In March, Biden announced that his administration would award Intel $19.5 billion in grants and loans to support the construction of semiconductor plants in Arizona, Nevada, Ohio, and New Mexico.
Additionally, Intel projected third-quarter revenue to fall short of market expectations due to decreased spending on traditional data center semiconductors and a shift toward AI chips, where the company is currently behind its competitors.
Shares of Intel, based in Santa Clara, California, dropped 20% in after-hours trading, positioning the chipmaker to potentially lose over $24 billion in market value. The stock had already fallen 7% on Thursday, following a broader decline in US chip stocks triggered by a cautious forecast from Arm Holdings the day before.
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Intel Corp CEO Pat Gelsinger stated in a memo to employees, Al Jazeera reported.
“Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected,” he added.
Previously a leader in chips for devices ranging from laptops to data centers, Intel has struggled to keep up with Nvidia and AMD in the midst of the AI boom.
In June, Intel announced it would pause the expansion of a significant factory project in Israel, citing that such decisions are influenced by "business conditions, market dynamics, and responsible capital management."
The company has significantly benefited from US President Joe Biden's initiatives to reduce the US economy's dependence on semiconductor manufacturing in Asia by bolstering the domestic industry.
In March, Biden announced that his administration would award Intel $19.5 billion in grants and loans to support the construction of semiconductor plants in Arizona, Nevada, Ohio, and New Mexico.
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