Aug. 1 (UPI) — Intel announced Thursday it is laying off 15,000 workers as part of a sweeping, $10 billion cost-cutting measure.
The cut represents 15% of its workforce, with Intel stating it was ceasing all “non-essential work.”
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” CEO Pat Gelsinger said in a company memo Thursday.
“Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low,” he continued.
The majority of these actions will be completed by the end of this year, Intel said in its announcement.
“This is painful news for me to share,” Gelsinger continued in the staff memo. “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.”
Gelsinger said Intel’s current revenue and workforce model are not sustainable, and the company was forced into making the cuts.
“For example, our annual revenue in 2020 was about $24 billion higher than it was last year, yet our current workforce is actually 10% larger now than it was then,” Gelsinger said.
Despite torrid growth in the microchip industry, and a facilities building boom across various parts of the country, Intel revenue was down 1% from the year prior. It reported a $1.6 billion loss while continuing to invest. The company reported revenue of $12.8 billion in the second financial quarter.
Intel employs more than 125,000 people, so while they are projecting 15,000 layoffs, they could reach as high as 19,000, but said it is changing its business model to be a bigger player in the microchip market.
The company is also set to receive up to $8.5 billion in U.S. government funding from the CHIPS Act, which invests more than $52 billion into the American economy to help strengthen and revitalize the semiconductor industry’s research, development and manufacturing capacity, and invest in and expand the American workforce, according to the legislation.
Intel has been slow to the burgeoning Artificial Intelligence scene, and has lost market share to Nvidia, which has become the most valuable public company in the world largely on the strength of its investments and work in the AI field.
Intel’s biggest losses were in its chip-making Foundry business, in which it made large investments in 2024.
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