Intel to layoff 15,000 employees in major restructuring plans

In a significant move to streamline operations and reduce costs, Intel has announced plans to cut approximately 15,000 jobs, equivalent to 15% of its workforce, by the end of this year. This decision, aimed at delivering $10 billion in cost savings by 2025, was communicated by Intel CEO Pat Gelsinger in a memo to employees ahead of an all-company meeting following the company's earnings call.

Gelsinger acknowledged the difficulty of this decision, describing it as "the hardest thing I've done in my career." The memo outlined the necessity of aligning Intel’s cost structure with a new operating model due to lower-than-expected revenue growth and high operational costs.

Intel has failed to capitalize on emerging trends like AI and the company which was once the biggest chip manufacturer is currently struggling to stay afloat. The CEO said the company must become leaner and more agile.

As a result, the company will need to cut underperforming products, eliminate overlapping responsibilities, and even suspend stock dividends starting next quarter to prioritize business investments and sustained profitability.

Here are all the key priorities outlined in the memo include:

Reducing Operational Costs: Companywide efforts to enhance operational and cost efficiencies, including significant headcount reductions.

Simplifying the Portfolio: Each business unit will review and streamline underperforming products, with a focus on integrating key software assets for a shift to systems-based solutions.

Eliminating Complexity: Efforts to reduce layers, eliminate overlapping responsibilities, and foster greater ownership and accountability. For example, consolidating Customer Success into the Sales, Marketing, and Communications Group.

Reducing Capital and Other Costs: Reviewing active projects and equipment to prioritize capital efficiency, reducing 2024 capital expenditures by more than 20%, and lowering the non-variable cost of goods sold by approximately $1 billion in 2025.

Suspend dividends.

The company has said it will announce a companywide enhanced retirement offering for eligible employees and broadly offer an application program for voluntary departures.

However, the restructuring announcement plans were not enough to convince investors as the company’s stock price cratered more than 26% in Friday trading, closing out one of its worst trading days in 40 years.