In Short:
Intel plans to cut thousands of jobs to recover from declining market share. CEO Pat Gelsinger is focusing on revitalizing manufacturing, investing in advanced technologies, and expanding into new markets. The company aims to slash annual costs by $3 billion in 2023. Intel’s stock has fallen 40% this year, but analysts expect revenue to remain stable in the second quarter. The Biden administration’s push to promote chip manufacturing in North America may benefit Intel.
Intel Plans Job Cuts to Fund Recovery
Intel is planning to reduce its workforce in order to finance a recovery and address its declining market share, according to a report by Bloomberg News citing sources familiar with the matter.
Despite the news, Intel’s stock saw a 1% increase in extended trading ahead of its quarterly results announcement on Thursday. However, the stock has seen a 40% decrease so far this year.
When contacted by Reuters, Intel chose not to comment on the report.
Company Restructuring
Intel, a prominent player in the PC and server markets, has been facing challenges in meeting the demand for chips used in AI applications. CEO Pat Gelsinger has initiated a restructuring plan to enhance the company’s competitiveness, focusing on improving manufacturing capabilities, investing in advanced technologies, and exploring new markets.
In 2022, Intel announced a cost-reduction plan, including workforce reductions, to cut annual costs by $3 billion in 2023. The company aims to reduce its headcount from 131,900 to 124,800 by the end of 2023, with an expected cost savings of $8-10 billion by 2025.
Market Outlook
Analysts predict that Intel’s second-quarter revenue will remain consistent with the previous year’s figures, with a significant decline expected in the data center and AI segments.
Intel, known for its in-house chip design and manufacturing, is now expanding its foundry business to manufacture chips for other companies.
Investors are hopeful that the Biden administration’s push to promote chip manufacturing in North America will benefit Intel by diversifying supply chains and reducing reliance on Taiwan.
