Intel confirms job losses: 15,000 to be cut
Intel CEO Pat Gelsinger says the wide-ranging redundancies will save money and set the firm up for 'a new era of growth'.
Earlier this week, rumours circulated that Intel would slash thousands of jobs. Yesterday, the US giant confirmed the details. It announced a 15% reduction in its workforce affecting approximately 15,000 employees.
In an internal memo to staff, CEO Pat Gelsinger, said the losses are necessary to move the company to a new operating model. He wants to save USD 10 billion by 2025 and change the direction of the chip space pioneer.
He wrote: "Our costs are too high, our margins are too low. This is painful news for me to share. I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history...Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate. Our revenues have not grown as expected and we’ve yet to fully benefit from powerful trends, like AI."
Gelsinger admitted that Intel's historic strategy of vertical integration is not sustainable and that the firm needs to compare itself to fabless product companies and other agile competitors. He also alluded to internal issues around "complexity, decision-making delays, and inefficiency."
The new strategy will see Intel reduce 2024 capital expenditures by more than 20%, and reduce non-variable cost of goods sold by roughly USD 1 billion in 2025. Intel will also suspend its stock dividend next quarter to prioritise investments in the business.
Ultimately, Gelsinger wants to accelerate Inte's drive towards a new integrated device manufacturing (IDM) model. It comprises three planks:
- A global, internal factory network for at-scale manufacturing
- Expanded use of third-party foundry capacity
- Building a world-class foundry business, Intel Foundry Services
He stated: "To live up to this mission, we must continue to drive our IDM 2.0 strategy, which remains the same: re-establish process technology leadership; invest in at-scale, globally resilient supply chain by expanding manufacturing capacity in the U.S. and EU; become a world-class, leading-edge foundry for internal and external customers; rebuild product portfolio leadership; and deliver AI Everywhere."
