Intel is cutting 15pc of its headcount this year, after recently cutting half of its management layers.
Intel reported a $12.9bn second quarter revenue, a flat growth compared to $12.8bn in Q2 2024. At the earnings call yesterday (24 July), CEO Lip-Bu Tan said that the company’s operating performance shows improved business efficiency.
The company reported $2.9bn in operating losses this quarter, down 81pc year-on-year, while its data centre and artificial intelligence business was up 4pc and foundry business up 3pc. The chipmaker’s stock value fell following the call.
However, Intel seems to be slowly reversing course after making a string of losses last year. In order to reduce expenditure and boost cash reserves, Tan – who took over just months earlier – cut thousands of roles and sold a majority stake in in its programmable chip business Altera, which the company purchased a decade earlier.
Looking ahead, the chipmaker forecasts between $12.6bn to $13.6bn in revenue in the upcoming quarter – higher than the average analyst expectations.
Tan said he is attempting to build a “financially disciplined foundry”.
“It’s going to take time, but we see clear opportunities to enhance our competitive position [and] improve our profitability,” he said.
In order to achieve that, Intel is reducing its headcount by approximately 15pc with plans to end the year with around 75,000 employees. Tan said the company already completed a “significant amount” of layoffs this quarter, cutting management layers by around half in the process. This string of layoffs comes just a year after Intel laid off 15,000 as a cost-cutting measure.
In addition, Tan finds some of Intel’s previous investments “too much [and] too soon”. According to him, the company’s factory footprint has become “needlessly fragmented and underutilised”.
To bring it in line with Tan’s controlled spending, Intel said it is cancelling its planned chip factory in Germany and assembling and testing facility in Poland, and consolidating its assembly and test operations in Cost Rica to sites in Vietnam and Malaysia. The company is also slowing down construction of its US chip factory in Ohio, it said.
Intel is tightening its business. Earlier this month, the company notified the Irish Government of mandatory layoffs at its Co Kildare foundry which could affect up to 200 people. Just days earlier, the company’s chief strategy officer stepped down from his role.
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