In the latest big tech layoff, Intel revealed that it is cutting 15,000 employees, representing 15% of the company’s total staff.
In a memo to employees, CEO Pat Gelsinger blamed the decision on poor financial performance, and an urgent need to slash costs.
While job losses in the tech industry have slowed since the start of the year, the industry still remains volatile, as the latest move from Intel indicates.
Intel Lays Off 15,000 Employees
On Thursday, Intel announced to its employees, via a statement, that it was making huge cuts to its staffing levels, with 15,000 employees, 15% of its entire workforce, in the firing line.
Intel CEO Pat Gelsinger, who penned the post, blamed Intel’s waning profit margins for the move, stating that the company’s costs are currently too high, and its margins too low, creating an urgent need to reduce spending, with a ‘tougher than expected’ financial outlook for the second half of 2024.
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The company’s last notable round of layoffs occurred in 2023, when it let got around 500 members of staff, but this latest announcement considerably dwarfs that move.
Intel’s Plan for the Future
In the statement, Gelsinger outlines Intel’s plan for the future, which he states will make the company ‘leaner, simpler and more agile’. They are:
Reduce operating costs: Reducing spending where possible, including the job losses already announced
Simplifying Intel’s Portfolio: Gelsinger announced that each area of the business is to review its portfolios and identify ‘underperforming products’.
Eliminating complexity: One of the themes of the move from Gelsinger, simplicity, involves ‘eliminating overlapping areas of responsibility’ and ‘stopping non essential work’. Some teams will be consolidated.
Reducing Capital and Other Costs: Capital expenditures are to be reduced by 20% in 2024, with all active projects and equipment being reviewed.
Suspending Dividend: Stock dividend is to be suspended next quarter.
Maintaining growth investments: Gelsinger states that the company’s IDM2.0 strategy is to stay on course, with investments in technology and core leadership being maintained.
Tech Industry Still at Risk from Layoffs
The tech industry has had a rough few years coming out of the pandemic, and job losses are sadly nothing new. Most of the big job cuts tend to happen at the start of the year. We saw this from the likes of Microsoft, Amazon and eBay, all shedding thousands of jobs each.
Intel’s announcement this week is a grim reminder that the industry as a whole is still highly volatile, with dwindling revenue margins making staff easy targets for quick cost reduction. Intel had been riding high before and during the pandemic, achieving a net income of around $20 billion each year from 2018 to 2021, suffering a sharp drop to $8 billion in 2022, and a further fall to $1.68 billion in 2023.
There are signs that Intel may be pinning its hopes on a reversal of fortune on AI. In his statement, Gelsinger notes that the company has ‘yet to fully benefit from powerful trends, like AI’. One of the key components of IBM’s current strategy is ‘AI everywhere’, so it’s likely that these investments have yet to pay off. However, it’s a crowded landscape, with every tech company currently putting its weight behind AI, despite some scepticism from consumers.
This won’t be the last lay off announcement from the tech industry in 2024, but it will surely be one of the largest.
