2024-08-02 11:40
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2024-08-02 11:40
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Intel, in an effort to get back on its feet, is implementing a new cost-cutting plan that is expected to save a total of about $10 billion by 2025. Unfortunately, this also means cutting more than 15,000 jobs at the tech giant.
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15,000 is an optimistic forecast, as Intel, which currently employs over 125,000 people worldwide, suggests that the layoffs could ultimately affect as many as 19,000 people. The drastic savings will not only affect employees, as cuts will also appear in the marketing and R&D sectors.
This year, the plan includes cutting capital expenditures by 20 percent and conducting a broad restructuring to see which projects are “not essential.” The company also says it will carefully review the finances of all active projects to make sure they are not, colloquially speaking, “burning money.”
Intel’s Huge Losses
Intel’s first quarter was marked by a loss of $437 million, but it doesn’t look so bad when you look at the losses of the second quarter. The loss of $1.6 billion was a significant disappointment for the company’s management, even though it had achieved its expected technological milestones.
In the second quarter of this year, Intel recorded $12.8 billion in revenue, which is a mere 1 percent decrease compared to the same period in 2023. Unfortunately, costs turned out to be higher and the chipmaking and lithography segment generated the most losses. It is worth noting that Intel did not record any losses in the area of sales of products themselves.
These are not the first layoffs
The previous major round of layoffs at the tech giant took place in October 2022. At that time, Intel reduced its workforce from 131,900 to 124,800, but in March 2024, the company was hiring 130,700 again.
The company has already been cutting its workforce this year, reaching 125,300 by the end of June, but that reduction is not included in the total number of layoffs planned at this time. Intel has already said it will offer “an expanded retirement offer to all eligible employees” and will allow for a broad application process for voluntary redundancies. It has also suspended dividend payments to shareholders to reduce expenses.
Intel shares have already been hit hard by the savings strategy
Intel shares tumbled in after-hours trading after Thursday’s earnings release, losing nearly 20% in an hour. The declines later deepened to 21.86%.
Looking at stock charts, Intel’s stock has clearly lagged behind the stocks of other semiconductor manufacturers listed on Wall Street this year. From January 2024 to the close of trading on August 1, the company’s stock was discounted by 40.96%. For comparison, Nvidia’s stock rose by 121.77% during that time, AMD’s price strengthened by 15.34%, and the S&P500 index gained 14.78%.
Prepared by: MT, MM
