### Intel Announces Major Workforce Reduction Amid Struggles
#### Significant Job Cuts
Intel has announced a significant reduction in its workforce, cutting 15 percent of its jobs, which translates to over 15,000 positions. This move comes as the company attempts to recover from disappointing financial results. In March, the US government pledged $8.5 billion to assist Intel in revitalizing its US chipmaking operations.
#### Financial Performance and Leadership Comments
Intel reported a 1 percent decline in year-on-year revenue for the second quarter. CEO Pat Gelsinger addressed the situation during an earnings call, stating:
“We do not take this lightly, and we have carefully considered the impact this will have on the Intel family. These are hard, but necessary decisions. These reductions do not impact our ability to execute our plan.”
#### Areas Affected and Market Reaction
The job cuts will impact sales, marketing, and administrative roles as part of a broader cost-cutting strategy. This follows a 5 percent staff reduction announced last year. Following the announcement, Intel’s stock dropped by more than 17 percent in after-hours trading.
#### Industry Expert Insights
Patrick Moorhead, chief analyst at [Moor Insights & Strategy](https://moorinsightsstrategy.com/), commented on the layoffs:
“It is a lot of jobs. Layoffs don’t always mean there’s something wrong with a company, but to me it’s all about the strategy.”
#### Intel’s Turnaround Plan
Intel is undergoing a challenging turnaround, focusing on producing chips for other companies through its foundry business and advancing its manufacturing methods. The company is also benefiting from the 2022 legislation that allocated $52.7 billion to reshore chip manufacturing and invest in research and workforce training. Additionally, Intel will receive tax credits and federal loans to support its investments.
#### Investment in US Chipmaking
The $8.5 billion from the US government will be used to build plants in Arizona, New Mexico, Ohio, and Oregon. These investments are expected to create over 10,000 company jobs, 20,000 construction jobs, and thousands more in supporting industries. Moorhead emphasized the positive impact of these investments:
“The money that Intel has brought in is being used to build factories. That isn’t stopping, and it does create a lot of jobs.”
#### Historical Context and Competitive Landscape
Intel, once dominant due to the rise of personal computing, missed opportunities in the smartphone era, losing market share to Arm-based chips. More recently, Nvidia has gained prominence with its AI-focused hardware. Intel has also lagged behind manufacturing competitors like TSMC and Samsung.
#### Government Support and Strategic Importance
The US government is supporting Intel’s efforts because advanced chips are crucial for economic and geopolitical competitiveness. The pandemic exposed vulnerabilities in the global supply chain, highlighting the need for domestic chip production. Currently, the US produces only 12 percent of the world’s semiconductors, down from 37 percent in the 1990s.
#### Future of the Semiconductor Industry
The consulting firm [McKinsey](https://www.mckinsey.com/industries/semiconductors/our-insights/the-semiconductor-decade-a-trillion-dollar-industry) predicts that the semiconductor industry’s value will grow from $600 billion in 2021 to over $1 trillion by 2030.
#### Shift Toward AI and Data Centers
Dan Hutcheson, an analyst with [Tech Insights](https://www.techinsights.com/), noted that Intel’s revenue shortfall reflects a shift toward AI-focused data center computing:
“It used to be that [Intel] owned the data center. What we’ve seen in the last few years is that the big hyperscalers have focused on AI and GPUs—entire AI data centers.”
Hutcheson believes Intel’s overall strategy is sound but suggests that the company is still grappling with the issues that caused it to fall behind initially.
5 Comments
Maybe all that government aid should come with job security guarantees!
15,000 jobs cut? What are they doing with all that money?
So, Intel takes the cash and still ditches thousands of workers?
Intel received billions and still plans to axe 15,000 jobs? Unbelievable!
Lily Harper: Billions in aid and 15,000 job cuts—what’s the deal, Intel?