Intel to lay off 15,000 workers

Intel announced it would lay off more than 15% of its workforce, or 15,000 workers, in a memo to employees on Thursday. The massive layoffs are part of a sweeping $10 billion plan to cut expenses by 2025, following a bleak second-quarter earnings report and outlook.

“Our revenue has not grown as expected — and we have not yet fully benefited from powerful trends like AI,” CEO Pat Gelsinger said in a note to employees. “Our costs are too high, our margins are too low. We need bolder action to address both of these issues — especially as our financial results and outlook for the second half of 2024 are more challenging than previously expected.”

As Gelsinger describes, Intel has struggled to capitalize on the AI ​​boom in much the same way as other hardware companies like Nvidia. Intel led the tech industry revolution around CPUs about 25 years ago, but has been slow to embrace newer waves of computing like smartphones and AI. Gelsinger says Intel’s annual revenue fell by $24 billion between 2020 and 2023, even as its workforce grew by 10% over the same time frame. That’s a tough sell for other chipmakers in the AI ​​boom, whose revenues and valuations have soared to astronomical heights.

Intel reported a 1% decline in revenue in the second quarter compared to the same period last year. The company attributed the loss to gross margin headwinds related to AI PC products. The company is also suspending dividend payments to shareholders starting in the fourth quarter of 2024 and is predicting “more challenging” trends in the second half of the year than previously expected.

In addition to the layoffs, Intel will broadly offer applications for a “voluntary separation” program next week to company employees, according to the memo. The company is also announcing a companywide expanded retirement offer for eligible employees.