Intel has announced plans to lay off more than 15,000 employees by the end of the year as part of a strategy to achieve $10 billion in cost savings by 2025.

Intel has revealed a significant workforce reduction, planning to lay off over 15,000 employees by the end of the year. This move is part of a broader cost-cutting strategy aimed at saving $10 billion by 2025. The layoffs, which could affect up to 19,000 jobs or about 15% of Intel's workforce, were announced in a memo following the company's second-quarter 2024 earnings call.

In the memo, Intel emphasized the need to "fundamentally change the way we operate" due to slower-than-expected revenue growth and the delayed benefits from emerging trends like artificial intelligence (AI). During the earnings call on August 1, Intel outlined plans to reduce operational and capital expenses to meet its cost-saving goals. The company aims to cut R&D and marketing expenses to $20 billion in 2024 and $17.5 billion in 2025, with further reductions expected in 2026. Additionally, Intel plans to decrease capital expenditure by more than 20% in 2024.

Reasons Behind the Layoffs

Earlier this year, Intel reported $7 billion in operating losses from its chipmaking business in 2023. The trend continued with a $1.6 billion loss in Q2 2024. Intel CEO Pat Gelsinger described the Q2 financial performance as "disappointing," despite achieving key product and process technology milestones.

The uncertainty surrounding AI profitability is another factor driving these cost-cutting measures. Investors and financial analysts have expressed concerns about the long-term profitability of AI investments. Intel CFO David Zinsner noted that the "accelerated ramp" of Intel's AI PC, a computer integrating AI from the hardware level, impacted second-quarter results. Intel, currently the market leader in AI PCs, has shipped over 15 million units since December 2023 and aims to ship more than 40 million by the end of the year.