Intel announced it will cut over 15% of its workforce, around 17,500 jobs, and suspend its dividend starting in the fourth quarter to focus on turning around its struggling manufacturing business, Reuters reports.
The company plans to complete the majority of job cuts by the end of 2024 and aims to cut operating expenses and capital expenditures by over $10 billion in 2025. CEO Pat Gelsinger emphasized the need for more field support and fewer headquarters staff. Intel’s PC chip business grew 9% in Q2, but high costs affected profitability. The data center business declined 3%, impacted by revoked export licenses in China. Intel plans a 17% cut in capital expenses for 2025, expecting these costs to remain flat in 2024. Intel’s shares dropped 20% in extended trading, losing over $24 billion in market value.
Intel’s position in AI chips has led to a 40% share price decline this year. The company forecast Q3 revenue between $12.5 billion and $13.5 billion, below the $14.35 billion average analyst estimate, with an adjusted gross margin of 38%, short of the 45.7% market expectation. Analysts expect Intel’s foundry business turnaround to take years, with TSMC likely maintaining its lead.
