Intel Corporation announced plans to cut approximately 15,000 jobs, representing 15% of its workforce, as part of a massive cost-saving initiative aimed at streamlining operations and improving profitability. The move comes as the semiconductor giant grapples with lower-than-expected revenues and intensifying competition in the artificial intelligence (AI) sector.

In an internal memo to employees following the company's second-quarter 2024 earnings report, CEO Pat Gelsinger outlined a comprehensive strategy to reduce costs by $10 billion in 2025. The majority of the job cuts are expected to be completed by the end of 2024.

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"Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate," Gelsinger stated in the memo.

He cited lower-than-anticipated revenue growth and the company's struggle to fully capitalize on AI trends as key factors driving the decision.

The cost-reduction plan includes several major components:

1. A 15% reduction in workforce, equating to roughly 15,000 roles

2. Suspension of the company's stock dividend starting next quarter

3. A more than 20% decrease in 2024 capital expenditures

4. A targeted $1 billion reduction in the non-variable cost of goods sold for 2025

Intel will offer an enhanced retirement package to eligible employees and implement a voluntary departure program. Gelsinger emphasized that these actions are necessary to address the company's high costs and low margins, particularly given the challenging financial outlook for the second half of 2024.

The CEO also highlighted the need to simplify Intel's portfolio, eliminate complexity, and foster greater accountability within the organization. Despite these cuts, Gelsinger affirmed that key investments in process technology and core product leadership would be maintained to support the company's IDM 2.0 strategy.

This restructuring marks one of the most significant changes in Intel's history and comes as the company faces increasing pressure from competitors in the rapidly evolving semiconductor industry. The move underscores the challenges faced by traditional tech giants as they navigate the shift towards AI-driven technologies and more efficient operations.

As Intel implements these sweeping changes, industry analysts will be closely watching to see if the company can successfully reposition itself for growth in an increasingly competitive and AI-focused market.