Intel to Cut 15,000 Jobs Amid AI Competition

Intel announced the layoff of 15% of its workforce, or approximately 15,000 employees, as it lags in the AI race.

The decision is part of a plan to reduce expenses by $10 billion by 2025, linked to the company’s poor financial performance, as reflected in its second-quarter earnings report. The firm reported a loss of $1.6 billion for the period.

Intel will halt dividend payments to shareholders from the fourth quarter of 2024 and anticipates “more challenging” trends in the second half of the year.

“Our revenues are not growing as expected, and we have yet to fully capitalize on powerful trends like artificial intelligence,” said CEO Pat Gelsinger.

He noted that the company’s expenses are too high and margins too low, requiring bold actions to rectify the situation.

The company’s shares fell by 19% following the report’s release, with a decline of over 42% since the beginning of the year.

The firm’s annual revenue decreased by $24 billion from 2020 to 2023, while its workforce grew by 10%, added Intel’s CEO. Other chip manufacturers have experienced the opposite: a sharp increase in profits during the AI boom.

Nvidia’s quarterly sales are twice those of Intel, and in June it became the world’s most valuable company. Advanced Micro Devices is valued by investors at over $100 billion and plans to earn $4 billion from AI chip sales by the end of 2024.

Intel reported a 1% decline in revenue in the second quarter to $12.8 billion compared to the same period last year. The gross profit issues are attributed to high expenses on AI PCs. Intel plans to “significantly expand this product next year to meet market demand.”

Gelsinger believes his company is on the right track in the long term. It can catch up with and surpass competitors in manufacturing, but for now, it must focus on finances.

In April, Intel announced the world’s largest neuromorphic computer, Hala Point—a device designed to mimic the human brain.

In the same month, the company introduced the next-generation AI chip, Gaudi 3.

A year ago, CEO Pat Gelsinger stated plans to integrate artificial intelligence into every product of the firm.