Announces revenue of $12.8 billion for the quarter with operating income of zilch.
Intel will be cutting 15,000 jobs, or 15% of its workforce, by the end of the year. The chip company has announced it aims to save $10 billion in 2025 as it reports no profits whatsoever from the previous three months.
"We plan to deliver $10 billion in cost savings in 2025, and this includes reducing our head count by roughly 15,000 roles, or 15% of our workforce," says Intel CEO Pat Gelsinger in a note to employees.
"This is painful news for me to share. I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company's history."
Gelsinger says the decision is due to the introduction of a new operating model, which "made it clear our cost structure is not competitive".
"For example, our annual revenue in 2020 was about $24 billion higher than it was last year, yet our current workforce is actually 10% larger now than it was then. There are a lot of reasons for this, but it’s not a sustainable path forward," Gelsinger says.
Intel has been trying to get itself back on a road to recovery for many years; CEO Gelsinger even was a part of said proposed recovery plan. Though it was not to be. It faces huge challenges in trying to turn itself into the profitable venture it once was, when money was quite literally flooding in, and it has yet to overcome many of them.
Its foundry business had slipped behind the competition and faces massive hurdles to catch up with competitors. Today, only a handful of the silicon inside its client CPUs and GPUs is actually made by Intel and its foundry business has operating losses of $2.8 billion for the previous three months. Many of Intel's costs have been seen to be playing catch-up to rivals such as TSMC.
Its CPUs are facing stern competition, not only from AMD, but ARM, too—not to mention the ongoing instability issues from Intel's own microcode. And the fastest growing computing market, AI, is playing into the hands of another computing company, Nvidia.
Intel's plan to drastically reduce its headcount will see a tremendous layoffs to staff impacting 15,000 employees. That's the equivalent of nearly half of the entirety of Nvidia's workforce, or a seriously large chunk of AMD's, too. Intel currently has well over 120,000 employees today.
Intel's CEO lays out some of the ways it intends to brace for even tougher times, and to make "bolder actions". Some of which may impact the products it chooses to commit to making in the future.
One of the priorities laid out by Gelsinger is to simplify its portfolio, which in no uncertain terms will see it cut projects it deems to be "underperforming."
It's easy to speculate as to which those could be. Intel's graphics division has long been the subject to such rumours, yet it is also a key market that is seeing exponential growth for Nvidia. Nothing has yet been confirmed, anyways, so let's not make our minds up just yet.
Other priorities include suspending its dividend, or its payout to investors; reducing capital and spending, eliminating complexity, and making further cost savings. Effectively, it would seem, going into a complete money-saving mode, and putting an end to a grand plan of spending heaps of cash to dig itself out of a lasting slump.
