Intel Confirms Huge Layoff To Cut Costs And Navigate ‘Tough Days Ahead’
The news of the layoffs came in a note to employees from Gelsinger following second-quarter 2024 earnings being published. It also comes at a time when the tech giant is facing severe stability issues with its 13th/14th Gen CPUs. While Gelsinger expressed his lamentation in having to make the announcement, he was steadfast in the fact Intel “must align” its cost structure with its new operating model, as well as fundamentally change the way the company operates.
“These decisions have challenged me to my core, and this is the hardest thing I’ve done in my career,” remarked Gelsinger in his note to employees. “My pledge to you is that we will prioritize a culture of honesty, transparency and respect in the weeks and months to come.”
As to why the changes were being implemented now, Gelsinger pointed to the fact in 2020 the annual revenue for Intel was about $24 billion higher than it was last year. However, the workforce was 10% larger than in 2020. While there were reasons for the increase in the workforce during those years, he said it simply was not a sustainable model moving forward.
Intel’s second-quarter 2024 financial results included the company’s revenue being $1.28 billion, down 1% year over year. “Our Q2 financial performance was disappointing,” remarked the CEO, “even as we hit key product and process technology milestones.”
According to Intel, the upcoming actions are intended on making the tech company “a leaner, simpler and more agile company.” The highlighted areas of focus shared by Gelsinger are reducing operational costs, simplifying Intel’s portfolio, eliminating complexity, reducing capital and other costs, suspending Intel’s dividend, and maintaining growth investments.
In his note to employees, Gelsinger explained the company must improve its execution, “adapt to new market realities, and operate as a more agile company.” In closing, the CEO reminded everyone that the world increasingly runs on silicon, and the world needs “a healthy and vibrant Intel.”
