Intel Downsizing 15 Percent of Workforce to Reduce Cost Amid Declining Revenue

The Intel logo is displayed outside of the Intel headquarters in Santa Clara, Calif., on April 26, 2018. Justin Sullivan/Getty Images

Chipmaker Intel Corp. announced on Thursday that it would downsize its workforce by 15 percent, or 15,000 roles, to reduce costs after reporting a loss in second-quarter earnings.

The California-based company reported that its second-quarter revenue fell from $12.9 billion in 2023 to $12.8 billion this year. It also posted a $1.6 billion net loss, or $0.38 per share.

In a memo to staff, Intel CEO Pat Gelsinger said the job cuts are part of the company’s $10 billion cost savings plan for 2025, with the majority of the layoffs expected to be completed by the end of the year.

Intel had 124,800 employees globally as of December 2023, according to a regulatory filing.

“This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history,” Gelsinger wrote in his memo.

“My pledge to you is that we will prioritize a culture of honesty, transparency and respect in the weeks and months to come.”

Gelsinger said that Intel aims to adjust its operating model to align with the new cost structure, given that the financial results and outlook for the second quarter did not meet its expectations.

“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 said.

Gelsinger noted that the company will announce next week an “enhanced retirement offering” for eligible employees and offer an application program for voluntary departures.

As part of its cost savings plan, Intel plans to eliminate “overlapping areas of responsibility” and “non-essential work.” The company will also reduce its capital expenditures by more than 20 percent and suspend its stock dividend starting in the fourth quarter of the year.

The company expects revenue of $12.5 billion to $13.5 billion for the third quarter. In a post-earnings call on Thursday, Intel CFO David Zinsner said the chipmaker expects a gross margin of 38 percent.

Zinsner said the second-quarter results were caused by gross margin headwinds from the accelerated ramp of Intel’s AI laptop product, and “higher-than-typical charges” related to noncore businesses and charges from unused capacity.

“By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet,” he stated.

The Biden administration in March proposed awarding Intel up to $8.5 billion in grants and $11 billion in loans to expand its semiconductor production in Arizona, New Mexico, Ohio, and Oregon.

The funding, which stems from the CHIPS and Science Act of 2022, marks the government’s largest investment ever in U.S. semiconductor manufacturing, according to senior administration officials.

Katabella Roberts contributed to this report.