Intel has confirmed plans to lay off 15% of its workforce, totalling around 15,000 employees, confirming previous speculation.
The decision follows a disappointing second quarter and is part of a broader strategy to achieve $10 billion in cost savings by 2025.
Intel CEO Pat Gelsinger shared the news in a letter to employees, highlighting the urgent need to align the company’s cost structure with its new operating model.
Intel confirms major layoffs
“Our revenues have not grown as expected… Our costs are too high, our margins are too low,” Gelsinger said, adding the company needed “bolder actions” in order to address challenges like a “tougher than previously expected” second half to the year and the fact that the company has not yet benefitted from the AI trend.
Despite an increase of around 10% to its workforce since 2020, Intel’s annual revenues have declined by a concerning $24 billion. The company’s most recent earnings revealed a 1% decline in revenues compared to the previous year, attributed to gross margin headwinds relating to its AI PC products.
Intel’s revenue for the three months ending June 29 stood at $12.8 billion. The CEO added: “Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones.”
David Zinsner, Intel’s CFO, commented: “By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet.”
In addition to the layoffs, Intel will offer a voluntary departure program and an enhanced retirement package for eligible employees.
Intel declined to comment on the news.