Intel announced Thursday that it will cut more than 15 percent of its workforce and suspend dividend payments starting in the fourth quarter as it tries to turn around its loss-making chipmaking business.
Shares of the Santa Clara, California-based company plunged 15 percent in after-hours trading, wiping out $18 billion of its market value.
Shares closed 7 percent lower on Thursday, in line with a drop in U.S. chip stocks, following conservative forecasts from Arm Holdings on Wednesday.
Most of the job cuts will be completed by the end of 2024, Intel said. The company’s payroll was 124,800 employees at the end of 2023.
“I need fewer people in headquarters and more people on the ground supporting customers,” Chief Executive Pat Gelsinger said in an interview.
The company also laid out plans to cut operating expenses and reduce capital spending by more than $10 billion by 2025.
Much of the focus from investors has been on the heavy investment and huge costs Intel has incurred in expanding its manufacturing capacity in a bid to compete with Taiwan’s TSMC.
“A $10 billion cost-cutting plan shows that management is willing to take strong, drastic measures to right the ship and fix the problems,” said Michael Schulman, chief investment officer at Running Point Capital.
“But we are all wondering if this is enough and if this is a belated reaction, given that Gelsinger has been at the helm of the company for more than three years,” he added.
As part of its cost-cutting plan, Intel expects capital expenditures in 2024 to be between $25 billion and $27 billion and is targeting gross capital expenditures of between $20 billion and $23 billion in 2025.
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– 2024-08-11 16:25:56
