Chipmaker Intel has announced plans to slash more than 15 percent of its workforce as it tries to make up ground on rivals such as Nvidia and AMD.
Under the restructuring plan announced on Thursday, the California-based company will shed about 15,000 jobs as part of efforts to cut costs by $10bn in 2025.
The move comes after the company reported a $1.6bn loss in the April-June period, compared with a profit of $1.5bn a year earlier.
Revenue declined 1 percent to $12.8bn, while forecasted revenue of between $12.5bn and $13.5bn for the July-September period fell short of analysts’ expectations.
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Intel Corp CEO Pat Gelsinger said in a memo to staff.
“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.”
Intel shares plunged 20 percent in extended trading, putting the chipmaker on course to lose more than $24bn in value when the stock market reopens on Friday.
Once a market leader for chips used in everything from laptops to data centres, Intel has struggled to keep pace with Nvidia and AMD amid the boom in artificial intelligence (AI).
Intel announced in June that it would halt the expansion of a major factory project in Israel, saying at the time that decisions to do with large-scale projects take into account “business conditions, market dynamics and responsible capital management”.
Under Gelsinger, Intel has shifted its focus to designing advanced AI processors and bolstering its for-hire manufacturing business after losing ground to Taiwan’s TSMC.
The company has been a major beneficiary of US President Joe Biden’s efforts to lessen the US economy’s reliance on semiconductor manufacturing in Asia by building up the domestic industry.
In March, Biden announced that his administration would provide Intel with $19.5bn in grants and loans to build semiconductor plants in the states of Arizona, Nevada, Ohio and New Mexico.
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