Intel to lay off thousands to reduce costs, focus on research, development and new plants

Intel Corp is preparing to cut thousands of jobs as part of a strategy to reduce costs and finance a significant effort to recover from declining earnings and market share losses.

The announcement of these layoffs could happen as soon as this week, according to sources familiar with the matter who requested anonymity because the information is not yet public.

Intel, which currently employs about 110,000 people excluding workers from units being spun off, is set to report its second-quarter earnings on Thursday.

Under Chief Executive Officer Pat Gelsinger, Intel is investing heavily in research and development to enhance Intel’s technology and restore its leadership in the semiconductor industry.

Under previous leadership, Intel’s dominant position weakened, allowing competitors like AMD to catch up and capture market share. An Intel spokesperson declined to comment on the job cuts.

Following the news, Intel shares saw a slight increase of about 1 per cent, reaching up to $31.11 in late trading.

Other companies, particularly NVIDIA Corp., have surged ahead in creating high-demand semiconductors designed for artificial intelligence tasks. Meanwhile, Intel faces challenges with inconsistent demand for its primary products, chips for laptops and desktop computers.

In a bid to improve Intel’s technological capabilities, Gelsinger has initiated a plan to build factories that will produce semiconductors for other chipmakers.

As part of this effort, Intel recently hired Naga Chandrasekaran from Micron Technology Inc. to serve as the chief global operations officer, overseeing the company’s manufacturing operations.

Intel’s workforce reduction is not unprecedented. The company reduced its headcount by about 5 per cent in 2023, bringing the total to 124,800 by the end of the year, following job cuts that began in October 2022. Additionally, Intel has slowed spending in other areas, aiming to achieve cost savings of up to $10 billion by 2025.

Analysts predict that Intel’s second-quarter revenue will be flat compared to the same period last year. However, they anticipate modest growth in the latter half of 2024, with total sales expected to increase by 3 per cent to $55.7 billion for the full year. If these projections hold, it would mark Intel’s first annual revenue increase since 2021.