On Thursday, Intel announced that it would sever over 15% of its employees and cease paying dividends beginning in the fourth quarter. This move is part of Intel’s efforts to turn around its struggling manufacturing division. Except for certain subsidiaries, Intel employed 116,500 people as of June 29, and the company stated that most job cuts would be finished by the end of 2024.
In addition, the company predicted lower-than-expected revenue for the third quarter. It struggles to keep up with competitors’ focus on AI chips and reduce spending on traditional data centre semiconductors.
The Santa Clara, California-based company Intel’s shares fell 20% during extended trading, resulting in a loss of over $24 billion in market value. Along with a decline in US chip stocks following Arm Holdings’ cautious forecast on Wednesday, the stock closed down 7% on Thursday.
In an interview with Reuters, CEO Pat Gelsinger stated, “I need more people in the field helping customers, not as many people at headquarters. Our objective is to pay a competitive dividend over time, but right now, we’re focussing on the balance sheet and deleveraging,” he stated about the dividend suspension. In addition, the company declared that it would reduce capital expenditure and operating expenses by over $10 billion in 2025, exceeding its original projections.
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