Intel said Thursday that the company will lay off about 15 percent of its workforce, layoffs that were forced upon it by unused manufacturing capacity and charges associated with the launch of its AI PCs.
Intel positioned it as part of the “next phase of its multiyear transformation strategy,” but the cuts are fairly severe. Intel intends to reduce R&D and marketing, and general spending to $20 billion in 2024, $17.5 billion in 2025, and even lower in 2026. Intel will cut over 15 percent of its 131,000-employee headcount, most by the end of the year. That’s over 19,000 people.
“Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones,” Pat Gelsinger, Intel’s chief executive, said in a statement. “Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation.”
Intel said that it’s nearing the completion of its plan to push through five manufacturing nodes in four years, and is therefore moving to a focus toward capital efficiency. That means that Intel will spend less on manufacturing than it expected: down 20 percent in gross capital expenditures in 2024. Right now, the company’s product roadmap appears unchanged, but company executives will provide more detail in a conference call Thursday afternoon.
Intel has recently suffered through issues associated with its 13th-gen Core chips, which it recently attributed to voltage problems.