Intel has announced plans to reduce its workforce by more than 15%. The company is grappling with intense competition from rivals like Nvidia in the AI chip market. This decision follows a challenging period for Intel, marked by declining revenues and profitability.
The company's global workforce totalled 124,800 employees at the end of 2023, meaning the cuts will impact nearly 19,000 jobs. Intel's stock dropped 12.6% in after-hours trading after falling 5.5% during the trading day, reflecting investor concerns about the company's future.
Intel has committed to increasing its cost-cutting measures by an additional $10 billion by 2025, with most job reductions occurring by the end of 2024. Details on which positions or locations will be affected are yet to be disclosed. Additionally, Intel will suspend its dividend starting in the fourth quarter.
Emarketer analyst Jacob Bourne noted that Intel faces significant challenges from competitors like Nvidia and AMD. This competition is particularly fierce in the AI chip sector, where Nvidia has seen substantial growth due to the rising demand for generative AI technologies.
In the second quarter, Intel's revenue fell by 1% year-over-year to $12.8 billion. The company reported a net loss of $1.6 billion, a sharp contrast to the $1.5 billion profit from the previous year. Both revenue and profit figures missed analyst expectations, further underscoring Intel's financial pressures.