US chip maker Intel said Thursday last week it will slash more than 15% of its workforce to streamline its operations.
The decision is a response to Intel’s USD 1.6 billion quarterly loss and tougher market conditions. Intel is making corrections with a lay-off over 18,000 employees and slashing USD 20 billion in expenses.
“Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones,” Intel chief executive Pat Gelsinger said in an earnings release.
“Second-half trends are more challenging than we previously expected.” The second quarter earnings were adversely impacted by “headwinds” to the ramp-up of Intel’s artificial intelligence PC product and unused capacity at its facilities, according to Intel CFO David Zinsner.
“By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet, Zinsner added.
In June 2024, Intel announced it was ceasing the expansion of a major factory project in Israel, which would have added an extra USD 15 billion towards a chip plant.
Moreover, Intel faced strong challenges from rival chipmakers Nvidia, AMD, and Qualcomm.
Although Intel ruled the chip manufacturing market for years, its competitors, especially Nvidia, have moved ahead due to specialized AI processors.
Meanwhile, Gelsinger had introduced Intel’s latest Xeon 6 processor for servers and shared more details about its next-gen Lunar Lake chips for AI PCs. “AI is driving one of the most consequential eras of innovation the industry has ever seen,” he added.