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After reporting a $1.6 billion net loss for Q2 2024, Intel is aiming to cut costs by $10 billion by next year. On Thursday, the tech giant announced layoffs affecting more than 15,000 people, about 15% of Intel's current workforce.
In a Thursday memo to staff, Intel CEO Pat Gelsinger said that revenue hadn't grown as much as expected and that Intel had "yet to fully benefit from powerful trends, like AI."
"Our costs are too high, our margins are too low," Gelsinger wrote.
Intel's new plan involves streamlining its businesses and narrowing its focus to the projects with the most impact. The company will "reduce layers, eliminate overlapping areas of responsibility" and "stop non-essential work," per the memo. Gelsinger gave the example of bringing the customer success team into the sales, marketing, and communications group.
"This is a tough day for all of us and there will be more tough days ahead," Gelsinger wrote. "But as difficult as all of this is, we are making the changes necessary to build on our progress and usher in a new era of growth."
He also mentioned that the majority of the layoffs will happen by the end of the year.
Intel CEO Pat Gelsinger. Photographer: Annabelle Chih/Bloomberg via Getty Images
One of Intel's goals is to bring its "AI Everywhere" AI products, including the AI PC, to a wider audience. The company also wants to broaden manufacturing capabilities in the U.S. and EU.
Intel has already reduced staff by about 5,000 from March to June, but those layoffs are not included in the new 15% cut.
When it comes to AI chip market share, Intel lags behind industry leader Nvidia. Bank of America analysts say Intel will have less than 1% of the market, compared to Nvidia's 70% to 95%.
Intel was down 55% year-to-date at the time of writing.
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