Chipmaker Intel Corp. is cutting a massive 15% workforce as it tries to turn around its business to compete with more capable rivals like Nvidia and AMD.
The Santa Clara, California-based company said Thursday it is also suspending its stock dividend as part of a broader cost-cutting plan. The bulk of the layoffs will be done this year.
Intel reported a second-quarter loss and a slight decline in revenue, and forecast third-quarter revenue below Wall Street expectations.
The company reported a loss of $1.6 billion, or 38 cents per share, in the April-June period. That’s down from a profit of $1.5 billion, or 35 cents per share, a year earlier. Adjusted profit excluding special items was 2 cents per share.
Revenue fell 1 percent to $12.8 billion from $12.9 billion.
Analysts on average had expected earnings of 10 cents a share on revenue of $12.9 billion, according to a survey by FactSet.
The Biden administration in March reached an agreement with Intel under the CHIPS and Science Act Intel said it would provide the technology company with up to $8.5 billion in direct financing and $11 billion in loans for computer chip factories in Arizona, Ohio, New Mexico and Oregon. At the time, Intel said the financing, along with additional investments, would create a total of 30,000 manufacturing and construction jobs.
“Intel’s announcement of a significant cost-cutting plan, including layoffs, may bolster its finances in the short term, but the move alone isn’t enough to redefine its position in a changing chip market,” said Jacob Bourne, an analyst at eMarketer. “The company is at a critical juncture as it leverages U.S. investment in domestic manufacturing and strong global demand for AI chips to establish itself in chipmaking.”
According to a regulatory filing, Intel will have 124,800 employees by the end of 2023. According to a memo to Intel employees, CEO Pat Gelsinger said they will reduce their workforce by about 15,000 people.
