Chipmaker Intel has announced “painful” plans to cut 15,000 employee roles, as part of a major push to cut USD $10 billion in costs by 2025. The announced layoff represents a 15% reduction in the company’s workforce, and will likely force changes to its overarching structure.
According to CEO Pat Gelsinger, the reason for the incoming job losses is that Intel is facing too high costs, and too low margins. While the company’s chips are in most mainstream computers, TVs, and other tech, it appears the business is not currently profitable. In April 2024, Intel disclosed a USD $7 billion loss within its chip-making unit, and at the time, Gelsinger claimed 2024 would mark the worst operating losses ever for the company’s chipmaking business.
Gelsinger cited “bad decisions” as part of these losses. Based on Reuters reporting, competition from Taiwan Semiconductor Manufacturing made a significant impact on Intel in recent years – and it’s fair to say the state of the economy also contributed to overall downturn.
In a new blog post, Gelsinger has described the resulting layoffs as “painful news” and the “hardest thing [he’s] ever done in [his] career.”
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Gelsinger said. “Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low.”
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“These decisions have challenged me to my core, and this is the hardest thing I’ve done in my career. My pledge to you is that we will prioritise a culture of honesty, transparency and respect in the weeks and months to come.”
As part of his announcement, Gelsinger revealed multiple internal initiatives to streamline the layoff process, including an “enhanced retirement offering” for experienced Intel employees, as well as voluntary departure offerings.
To ensure a “sustainable path forward” the announced layoffs will take place slowly over the coming months, with employees either voluntarily leaving, or being cut based on eliminated roles. Most jobs will also change to suit tighter workplace units – Gelsinger has announced a need to “change the way [Intel] operates” by reducing complexity, automating and simplifying processes, eliminating bureaucracy, removing inefficiency, and expediting workflows.
“This is a tough day for all of us and there will be more tough days ahead. But as difficult as all of this is, we are making the changes necessary to build on our progress and usher in a new era of growth,” Gelsinger said.
Our thoughts are with those impacted by the announced layoffs at Intel.
