Intel has announced a significant reduction in its workforce, planning to cut around 15,000 jobs. This decision is part of a larger strategy to save $10 billion by 2025. The company confirmed these layoffs in its Q2 2024 earnings report, stating that over 15 per cent of its workforce will be affected, with most cuts happening by the end of 2024.
Intel's CEO, Pat Gelsinger, explained the reasons behind this move. The company needs to align its costs with its new operating model. Despite the growing importance of trends like AI, Intel's revenues haven't increased as expected, and its costs are too high, leading to low profit margins.
Gelsinger pointed out that Intel's financial performance in the second half of 2024 looks tougher than expected. In 2023, Intel's chip-making division lost $7 billion while generating $18.9 billion in revenue. This is part of the reason why Intel needs to take bold actions to improve its financial situation.
To support affected employees, Intel plans to offer enhanced retirement packages and voluntary departure programmes. Gelsinger acknowledged the difficulty of these decisions and promised to prioritise a culture of honesty, transparency, and respect moving forward.
Intel is not alone in making such cuts. Other tech companies have also announced layoffs in recent years. For example, Unity reduced its workforce by 25%, Discord by 17%, and Microsoft made cuts in its HoloLens and Azure cloud teams. Google also announced layoffs in its hardware, core engineering, and Google Assistant divisions.
Intel's decision to lay off 15,000 employees is a significant move aimed at reducing costs and improving profitability. While it's a tough period for the company and its staff, Intel hopes these steps will help it navigate financial challenges and will position it better against the growing competition in the market.