On the other hand, Intel reported that roughly 15% of its workforce — or around 15,000 employees– will lose their jobs. The company expects to lay off at least 8,000 people in all as part of a larger mission to eliminate $10 billion in spending by 2025 following disappointing second-quarter earnings and an uncertain future.
“…our revenues have not grown as fast nor as broadly as initially anticipated, and we expected to feel some impact of powerful industry trends like AI,” CEO Pat Gelsinger wrote in the memo. We are not really profitable, as our costs simply ate away at any margins. Our financial results and the second-half 2024 outlook has become, in our view, a bit uglier than we anticipated (in part due to exogenous factors), so bolder moves are necessary.
Compared to Nvidia, Intel has struggled more than its rivals in seizing opportunities from the AI-fever. Although Intel was at the forefront of in reinventing microprocessor chips 25 years ago, it has been quite late to catch on with the changing dimensions to computing such as smartphones and AI. Intel’s annual revenue dropped $24 billion from 2020 to the “end of that period in 2023,” said Gelsinger (though he mentioned Intel added a net-10% more employees during this span) That stands in stark contrast to other chipmakers who have enjoyed soaring revenues and valuations during the populist AI surge.
Revenues fell 1% from the same time last year in Intel’s second quarter, and attributed reasons similar to EPS results with AI PC products pressuring gross margins. The company also said it expects more difficult trends in the second half of this year than previously anticipated, and announced that starting from the fourth quarter of 2024 it would suspend its shareholder dividend.
At the same time, Intel will offer a “voluntary departure” program to employees next week and an enhanced retirement offering for those eligible.
