What Business Strategy Is Behind Intel바카라�s Plan To Lay Off 15% Of Workforce?

Intel has announced plans to cut 15% of its workforce, roughly 15,000 jobs, as part of a strategic overhaul aimed at competing more effectively with rivals like Nvidia and AMD. In a memo to employees, CEO Pat Gelsinger stated that the company aims to save $10 billion by 2025.

바카라�Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,바카라� Gelsinger wrote, citing stagnant revenues and the company's inability to capitalize on emerging trends like artificial intelligence (AI).

The job cuts follow a disappointing quarter for Intel. The company will also announce an "enhanced retirement offering" and a voluntary departure program next week.

바카라�This is the hardest thing I바카라�ve done in my career,바카라� Gelsinger said, with the majority of layoffs expected to be completed this year. As part of its cost-cutting measures, Intel will also suspend its stock dividend.

Intel reported a second-quarter loss of $1.6 billion, or 38 cents per share, compared to a profit of $1.5 billion, or 35 cents per share, a year earlier. Revenue declined slightly from $12.9 billion to $12.8 billion. Analysts had expected earnings of 10 cents per share on revenue of $12.9 billion.

Following the announcement, Intel's stock dropped 19% in after-hours trading, potentially erasing $24 billion from its market value when the market opens on Friday.

eMarketer analyst Jacob Bourne commented that while Intel's cost-cutting may improve its near-term financials, it alone will not redefine its position in the competitive chip market. Intel is at a critical juncture, leveraging US investments in domestic manufacturing and the rising demand for AI chips.

Gelsinger emphasized the long-term benefits of investments in the AI PC market, predicting that AI PCs will grow from less than 10% of the market today to more than 50% by 2026.

Intel, which both designs and manufactures chips, is expanding its foundry business in the US, competing with giants like Taiwan Semiconductor Manufacturing Co. (TSMC). Gelsinger바카라�s lobbying has made Intel a major beneficiary of the 2022 CHIPS and Science Act, which aims to bolster domestic chip manufacturing.

In March, President Joe Biden celebrated a deal providing Intel with up to $8.5 billion in direct funding and $11 billion in loans for new chip plants across the U.S., highlighting the investment as a way of 바카라�bringing the future back to America.바카라�

Intel바카라�s planned $20 billion plant near Columbus, Ohio, is expected to create 7,000 construction jobs and 3,000 full-time jobs with an average salary of $135,000 a year. Bourne noted that while Intel is earmarked for substantial government investment, building the necessary infrastructure and upskilling the local workforce will take time.