US chip maker Intel said Thursday last week it will slash more than 15% of its workforce to streamline its operations.<\/p>\n
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.<\/p>\n
“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.<\/p>\n
“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.<\/p>\n
“By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet, Zinsner added.<\/p>\n
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.<\/p>\n
Moreover, Intel faced strong challenges from rival chipmakers Nvidia, AMD, and Qualcomm.<\/p>\n
Although Intel ruled the chip manufacturing market for years, its competitors, especially Nvidia, have moved ahead due to specialized AI processors.<\/p>\n
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.