US chip manufacturer Intel is planning to axe 15,000 jobs as it attempts to reposition itself, after reporting a loss in its second quarter.
The chipmaker, which has UK operations in London, Slough, Swindon and Manchester, said it will implement a comprehensive reduction in spending, including a “more than 15% headcount reduction” in order to “resize and refocus”.
Intel’s second-quarter revenue fell 1%, compared with a year earlier, to $12.8bn.
Pat Gelsinger, Intel chief executive, said: “Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones. Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies.”
Technology job cuts
Intel expects most jobs to be cut by the end of 2024. Although it is not yet established exactly where the job cuts will fall, Gelsinger implied that office-based roles were vulnerable. He said: “I need less people at headquarters, more people in the field, supporting customers.”
The chipmaker has faced fierce competition in recent years from rivals Nvidia and AMD and has struggled to capture market share in the production of chips used for artificial intelligence.
In a memo to staff Gelsinger wrote: “Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate.
“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 added that Intel would announce an “enhanced retirement offering” for eligible employees next week, and launch an application programme for voluntary redundancies.
“I believe that how we implement these changes is just as important as the changes themselves, and we will adhere to Intel values throughout this process,” he continued.
“These decisions have challenged me to my core, and this is the hardest thing I’ve done in my career,” he said.
Intel’s share value fell 20% to $29.05 in after-hours trading in New York on Thursday. Its shares have already lost almost 40% of their value this year amid investor concerns that it has fallen behind in the AI chip race.
Intel also scrapped its dividend and announced a 20% slowdown in capital spending.
The corporation’s news is the latest in a long line of job cuts concerning household name tech giants, with eBay announcing 1,000 job losses in June.
Additional reporting by Adam McCulloch.
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