Intel Layoff Shocker: 15,000 to Lose Jobs in Plan to Save $10B in 2025

Silicon titan Intel on Thursday said it will cut 15,000 jobs by the end of the year -- 15% of its global workforce -- in a move CEO Pat Gelsinger called “painful to share.”

The company announced second quarter results that showed revenue down 1% year-over-year at $12.8 billion. But the company also said its net income was down 85% to $100 million and earnings per share were also down 85%.

In a letter to employees, Gelsinger said the quick layoffs and aggressive cost-cutting measures will mark “some of the most consequential changes in our company’s history.” Intel was late to cash in on the AI boom, as competitors like NVIDIA and AMD have shown growth. At the same time, Intel is continuing its ambitious push to retake its position as a global leader in chip manufacturing.

“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Gelsinger said. “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. We need bolder actions to address both -- particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.”

Gelsinger said the cuts have “challenged me to my core, and this is the hardest thing I’ve done in my career.”

The company said it will announce next week a company-wide enhanced retirement offering for eligible employees and an application program for “voluntary departures.”

Gelsinger said the company needed to simplify its operations as it moves ahead with its foundry goals. “Since introducing our new operating model, we have taken a clean-sheet view of the business and assessed ourselves against benchmarks for high-performing foundries, fabless product companies and corporate functions,” he wrote. “This work made it clear our cost structure is not competitive.”

Gelsinger’s letter also noted that Intel’s annual revenue in 2020 was about $24 billion higher than last year, yet the workforce is 10% larger now, saying that “it’s not a sustainable path forward.”

While layoffs are never pleasant, Scott Constable, alliance director at data center infrastructure specialists Vesper Technologies, sees a brighter future at Intel. “Every cloud has its silver lining,” he wrote in an email statement. “Despite how Intel’s Q2 earnings may appear, industry observers are far more buoyant about its next few quarters.”

This story is developing, and InformationWeek will update.