'Our revenues have not grown as expected – and we've yet to fully benefit from powerful trends, like AI,' CEO says
Chipmaker Intel has announced that it is laying off roughly 15,000 employees this year as it moves to significantly cut costs.
Intel CEO Pat Gelsinger told employees in a note shared on its website that the chipmaker is planning to deliver $10 billion in cost savings in 2025.
"This includes reducing our headcount by roughly 15,000 roles, or 15% of our workforce. The majority of these actions will be completed by the end of this year," he said.
According to Gelsinger, the company will implement an enhanced retirement offering for eligible employees and offer an application programme for voluntary departures.
"I believe how we implement these changes is just as important as the changes themselves, and we will adhere to Intel values throughout this process," the CEO said in the note.
Intel has several offices in Canada, including ones in Toronto, Vancouver and Waterloo, Ont.
Gelsinger attributed the decision to aligning cost structures with Intel's new operating model.
"Our revenues have not grown as expected – and we've yet to fully benefit from powerful trends, like AI," he said.
The company posted a revenue of $12.8 billion in the second quarter, down one per cent year over year, according to its latest financial results.
"Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected," Gelsinger said.
In addition to costs, the CEO also attributed the decision to Intel's plan to change the way it operates.
"There's too much complexity, so we need to both automate and simplify processes," he said. "It takes too long for decisions to be made, so we need to eliminate bureaucracy. And there's too much inefficiency in the system, so we need to expedite workflows."
The CEO said announcing the cuts is "painful news to share."
"This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history," he added.
Gelsinger further told employees that these decisions have challenged him to his core.
"This is the hardest thing I've done in my career. My pledge to you is that we will prioritize a culture of honesty, transparency, and respect in the weeks and months to come," he stated.
Intel now joins the growing list of organisations across the world that have been laying off employees in the past months, including Tesla, Cisco, Indeed, Citigroup, among others.
