San Francisco: Intel, the US-based chipmaker, announced on Thursday that it will reduce its workforce by more than 15 percent in a move to streamline operations. This decision is part of a plan to cut approximately $20 billion in expenses this year, following a reported loss of $1.6 billion in the most recent quarter.
“Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones,” said Intel’s CEO, Pat Gelsinger, in an earnings release. “Second-half trends are more challenging than we previously expected.”
According to Chief Financial Officer David Zinsner, second-quarter earnings were negatively impacted by issues related to the ramp-up of Intel’s artificial intelligence PC product and unused capacity at its facilities. “By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet,” Zinsner added.
Intel had 124,800 employees at the end of last year, meaning the layoffs could affect around 18,000 positions. In June, Intel halted the expansion of a major factory project in Israel, which would have added $15 billion towards a chip plant. Intel stated that “managing large-scale projects, especially in our industry, often involves adapting to changing timelines” and that decisions are based on “business conditions, market dynamics and responsible capital management.”
This belt-tightening comes shortly after Intel showcased new technologies to compete with rivals Nvidia, AMD, and Qualcomm, claiming it would lead the artificial intelligence revolution. Despite decades of market dominance in chips for laptops and data centers, Intel has recently been outpaced by competitors, particularly Nvidia, in specialized AI processors.
At Taiwan’s Computex expo, Gelsinger introduced Intel’s latest Xeon 6 processors for servers and detailed the next-gen Lunar Lake chips for AI PCs. “AI is driving one of the most consequential eras of innovation the industry has ever seen,” Gelsinger said. “The magic of silicon is once again enabling exponential advancements in computing that will push the boundaries of human potential and power the global economy for years to come.”
Gelsinger emphasized that Intel’s latest equipment offers the best mix of performance, energy efficiency, and affordability. His presentation followed keynote speeches by Nvidia’s Jensen Huang, AMD’s Lisa Su, and Qualcomm’s Cristiano Amon, all making competing claims about their products’ superiority in AI.
In June, Microsoft revealed its Copilot+ AI PCs, which will integrate artificial intelligence features into the Windows operating system. Major computer manufacturers like Dell, HP, Samsung, and Lenovo will include these AI capabilities directly on the device, not just via the internet.
Intel, citing the Boston Consulting Group, stated that AI computers are expected to make up 80 percent of the PC market by 2028.
