Chipmaker Intel announced that it is laying off roughly 15,000 employees, or 15 per cent of its massive workforce, in an effort to turn around its business and compete with more successful rivals like Nvidia and AMD. Intel Corp.
CEO Pat Gelsinger stated in a memo to employees on Thursday that the company intends to save USD 10 billion by 2025.
He (CEO Pat Gelsinger) stated in the memo that was posted on Intel's website, 'Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate.'
'We haven't seen the anticipated growth in our revenues, and we haven't yet fully benefited from significant trends like AI. Our margins are too thin and our costs are too high.'
Intel's quarterly results
According to a statement, Intel's revenue for the fiscal second quarter, which concluded on June 29, decreased by 1 per cent year over year. From net income of USD 1.48 billion, or 35 cents per share, in the year-ago period, the company plunged to a USD 1.61 billion net loss, or 38 cents per share, in the current year.
The company also announced that it will reduce its full-year capital expenditures by more than 20 per cent and that it will not pay its dividend in the fiscal fourth quarter of 2024 | Intel
The company also announced that it will reduce its full-year capital expenditures by more than 20 per cent and that it will not pay its dividend in the fiscal fourth quarter of 2024
Reasons behind massive layoffs
Much of the damage was caused by large tech companies, including behemoths like Amazon, Meta, and Apple. These businesses made a lot of hires to handle the increase in online and remote work.
But when the pandemic's effects subsided, these companies started implementing mass layoffs. The largest single layoff in the tech sector since 2020 was Google's 12,000 employee layoff in January 2023.
Tech-related jobs fall under the broad category of "Computer and Mathematical Occupations," according to the Bureau of Labor Statistics. Compared to the national average, only 3.3 per cent of these professionals belonged to a union in 2022. In the event that the business decides to fire them, this offers the employees very little negotiating leverage.
