Pat Gelsinger claimed this was "the hardest thing I've done in my career."
Intel will lay off over 15,000 employees, approximately 15 per cent of its workforce by the end of 2024, CEO Pat Gelsinger announced on Thursday. In a memo to staff, Mr Gelsinger said the decision came as part of the company's plans to "deliver $10 billion in cost savings in 2025."
The company's failure to fully benefit from "powerful trends like AI", high costs, and low margins compelled the restructuring, he said.
"Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate," he stated. Intel reported a $1.6 billion net loss for Q2 2024, which led to the need for cost-cutting measures.
Mr Gelsinger claimed this was "the hardest thing I've done in my career."
Intel has taken a "clean-sheet view" of the business and assessed itself against benchmarks, revealing a cost structure that is not competitive, he said. Despite a $24 billion higher annual revenue in 2020 compared to last year, the workforce grew by 10 per cent, which, he said, was not a "sustainable path forward".
The company's key priorities include reducing operational costs, simplifying its portfolio, eliminating complexity, reducing capital and other costs, suspending its dividend and maintaining growth investments, Pat Gelisnger said. Intel now needs a leaner, simpler and more agile company to drive progress and usher in a "new era of growth", he added.
Mr Gelsinger acknowledged the difficulty of the changes, saying the path ahead won't be easy, but necessary to build on progress and achieve the company's mission to create world-changing technologies that improve lives. Intel "must continue to drive its IDM 2.0 strategy" and build a sustainable financial engine to succeed, he said.
The layoffs come as Intel lags behind industry leader Nvidia in the AI chip market, with analysts predicting Intel will have less than 1 per cent market share compared to Nvidia's 70 per cent to 95 per cent. Intel's stock has fallen 55 per cent year-to-date as of now.