Intel Plans Job Cuts to Finance Recovery
Intel plans to cut thousands of jobs this year to finance a recovery and deal with eroding market share. Shares of the chipmaker were up about 1% in extended trading, but have slumped 40% so far this year. The U.S. chipmaker, a major player in the personal computer and server markets, is struggling to keep pace with the growing demand for chips used in AI applications.
CEO’s Turnaround Strategy
CEO Pat Gelsinger is spearheading a turnaround strategy to regain the company’s competitive edge. The focus is on revamping manufacturing capabilities, investing in advanced chip technologies, and venturing into new markets. In October 2022, Intel announced a cost-reduction plan, including “people actions”, to slash annual costs by $3 billion in 2023. This plan aims to reduce the company’s headcount to 124,800 by the end of 2023.
Cost-Saving Initiatives
- The cost-reduction plan intends to achieve annual savings between $8 billion and $10 billion by 2025.
- Analysts predict the company’s second-quarter revenue to be the same as last year, with a 23% decline expected in the data center and AI segment.
- Intel, known for designing and manufacturing its chips, is now expanding into the foundry business, producing chips for other companies.
Government Support and Investor Expectations
Investors anticipate a push from the Biden administration in North America to promote chip manufacturing. This move aims to diversify supply chains and reduce reliance on Taiwan, potentially boosting Intel’s prospects in the market.
Hot Take: Intel’s Bold Moves in the Face of Challenges
Intel’s decision to cut thousands of jobs to finance a recovery and cope with eroding market share reflects the challenging landscape. As the company embarks on a turnaround strategy led by CEO Pat Gelsinger, all eyes are on Intel’s future trajectory amidst the evolving semiconductor industry.
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