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Intel is laying off over 15,000 employees and will stop ‘non-essential work’

That’s a lot of layoffs.

www.theverge.com

Intel’s on a long, long road to recovery, and over 15,000 workers will likely no longer be coming along for the ride. The chipmaker just announced it’s downsizing its workforce by over 15 percent as part of a new $10 billion cost savings plan for 2025, which Intel says will mean a headcount reduction of greater than 15,000 roles. The company currently employs over 125,000 people, so layoffs could be as many as 19,000 people.

Intel will reduce its R&D and marketing spend by billions every year; it will reduce capital expenditures by more than 20 percent this year; it restructure to “stop non-essential work,” and review “all active projects and equipment” to make sure it’s not spending too much.

“This is painful news for me to share. I know it will be even more difficult for you to read,” reads part of a memo from Intel CEO Pat Gelsinger to staff, which you can also read in full at the bottom of this post.

The company just reported a loss of $1.6 billion for Q2 2024, substantially more than the $437 million it lost last quarter. “Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones,” admitted Gelsinger in the company’s press release. “Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI,” he writes in his employee memo.

It’s not like all Intel’s businesses are failing; while Intel has absolutely been losing money on its chipmaking Foundry business as it invests in new factories and extreme ultraviolet (EUV) lithography, to the tune of $7 billion in operating losses in 2023, the company products themselves aren’t unprofitable.

 

[LordCBH]

Holy fucking shit

 

[Lokaum D+]

 

[Bartski]

 

[West Texas CEO]

Thanks Kamala

 

[Dacvak]

Damn. That’s rough. I had no idea so many people even worked at intel, but I guess that makes sense.

 

[Sethbacca]

Goddamn, oh how the mighty have fallen.

 

[Bartski]

Were they making a gaas game or something?

 

[sloppyjoe_gamer]

The Biden/Harris gift just keeps on giving

 

[DonkeyPunchJr]

Man that really sucks. I wonder what this means for their GPU business.

 

[adamsapple]

Here’s the full memo from Gelsinger:

Team,

We have moved our All Company Meeting to today, following our earnings call, as we are announcing significant actions to reduce our costs. We plan to deliver $10 billion in cost savings in 2025, and this includes reducing our head count by roughly 15,000 roles, or 15% of our workforce. The majority of these actions will be completed by the end of this year.

This is painful news for me to share. I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history. When we meet in a few hours, I’ll talk about why we’re doing this and what you can expect in the coming weeks. In advance of that, I wanted to preview some of what’s on my mind.

Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate. 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. 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.

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 prioritize a culture of honesty, transparency and respect in the weeks and months to come.

Next week, we’ll announce a companywide enhanced retirement offering for eligible employees and broadly offer an application program for voluntary departures. I believe that how we implement these changes is just as important as the changes themselves, and we will adhere to Intel values throughout this process.

Why Now?

Since introducing our new operating model, we have taken a clean-sheet view of the business and assessed ourselves against benchmarks for high-performing foundries, fabless product companies and corporate functions. This work made it clear our cost structure is not competitive.

For example, our annual revenue in 2020 was about $24 billion higher than it was last year, yet our current workforce is actually 10% larger now than it was then. There are a lot of reasons for this, but it’s not a sustainable path forward.

Beyond our costs, we need to change the way we operate – something many of you shared as part of our Employee Experience Survey. There’s too much complexity, so we need to both automate and simplify processes. 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.

Key Priorities

The actions we are taking will make Intel a leaner, simpler and more agile company. Let me highlight our areas of focus:

Reducing Operational Costs: We will drive companywide operational and cost efficiencies, including the cost savings and head count reductions mentioned above.

Simplifying Our Portfolio: We will complete actions this month to simplify our businesses. Each business unit is conducting a portfolio review and identifying underperforming products. We are also integrating key software assets into our business units so we accelerate our shift to systems-based solutions. And we will narrow our incubation focus on fewer, more impactful projects.

Eliminating Complexity: We will reduce layers, eliminate overlapping areas of responsibility, stop non-essential work, and foster a culture of greater ownership and accountability. For example, we will consolidate Customer Success into the Sales, Marketing and Communications Group to streamline our go-to-market motions.

Reducing Capital and Other Costs: With the completion of our historic five-nodes-in-four-years roadmap clearly in sight, we will review all active projects and equipment so we begin to shift our focus toward capital efficiency and more normalized spending levels. This will reduce our 2024 capital expenditures by more than 20%, and we plan to reduce our non-variable cost of goods sold by roughly $1 billion in 2025.

Suspending Our Dividend: We will suspend our stock dividend beginning next quarter to prioritize investments in the business and drive more sustained profitability.

Maintaining Growth Investments: Our IDM2.0 strategy is unchanged. Having fought hard to reestablish our innovation engine, we will maintain the key investments in our process technology and core product leadership.

The Future

I have no illusions that the path in front of us will be easy. You shouldn’t either. 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.

When we began this journey, we set our sights high, knowing that Intel is a place where big ideas are born and the power of what’s possible triumphs over the status quo. After all, our mission is to create world-changing technologies that improve the lives of every person on the planet. And at our best, we have exemplified these ideals more than any company in the world.

To live up to this mission, we must continue to drive our IDM 2.0 strategy, which remains the same: re-establish process technology leadership; invest in at-scale, globally resilient supply chain by expanding manufacturing capacity in the U.S. and EU; become a world-class, leading-edge foundry for internal and external customers; rebuild product portfolio leadership; and deliver AI Everywhere.

Over the past few years, we have rebuilt a sustainable innovation engine that is largely in place and on track. It’s now time to focus on building the sustainable financial engine needed to drive our performance. We must improve our execution, adapt to new market realities and operate as a more agile company. That’s the spirit of the actions we are taking – knowing that the choices we make today, as difficult as they are, will strengthen our ability to serve our customers and grow our business for years to come.

As we take these next steps in our journey, let’s not forget that there has never been a greater need for what we do. The world will increasingly run on silicon – and the world needs a healthy and vibrant Intel. That’s why the work we are doing is so consequential. Not only are we remaking a great company, but we are also creating technology and manufacturing capabilities that will reshape the world for decades to come. And this is something we should never lose sight of as we push forward in pursuit of our goals.

We’ll talk more in a few hours. Please come with your questions so we can have an open and honest discussion about what comes next

 

[Loomy]

Okay. When I said "This is the week to share bad news" I didn't mean news this bad, god damn.

How the fuck did Intel have over 125k staff?

Man that really sucks. I wonder what this means for their GPU business.

Deader than dead

Simplifying Our Portfolio: We will complete actions this month to simplify our businesses. Each business unit is conducting a portfolio review and identifying underperforming products. We are also integrating key software assets into our business units so we accelerate our shift to systems-based solutions. And we will narrow our incubation focus on fewer, more impactful projects.

 

[proandrad]

This is what happens when you spend years of pushing out refreshed versions of the same cpu and the competition finally surpasses you.

 

[Roman Empire]

HOLY FUCKHING SHIT!

15k employees is alarming. Hope everyone lands a new job as fast as they can.

 

[Skifi28]

I wonder if discrete GPUs are considered essential or not considering how they probably lost money on the first gen.

 

[Randall365]

Maybe just not make chips that are not utterly shit so Apple and PC/laptop users abandon you.

Still feel annoyed that the 13th and 14th gen chips are just them putting way more power through the 12th gen ones. Wow - they degrade faster!?!?

 

[Jaybe]

Is there QA department essential?

 

[LordCBH]

I wonder if discrete GPUs are considered essential or not considering how they probably lost money on the first gen.

Arc will probably not continue, would be my guess.

 

[Magic Carpet]

Jeebus

 

[Lagspike_exe]

The obvious answer to technological lag is to... cut R&D. They will destroy a legendary firm.

 

[SJRB]

The company just reported a loss of $1.6 billion for Q2 2024, substantially more than the $437 million it lost last quarter. “Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones,”

What the hell are they doing over there? And how do you have 19.000 non-essential workers?

 

[Codeblew]

The obvious answer to technological lag is to... cut R&D. They will destroy a legendary firm.

Yeah, that is what I was thinking. R&D is the last thing a tech company should be cutting.

 

[feynoob]

Don't worry guys, our stock will be high now.

 

[dem]

Don't worry guys, our stock will be high now.

The stock dropped over 20% today....

Chip stocks are getting hammered

 

[ChorizoPicozo]

is this bad?

 

[Big Baller]

 

[ChorizoPicozo]

Here’s the full memo from Gelsinger:

wating for a video instead

 

[DonkeyPunchJr]

Down 5.5% during the day and then another -17% after hours when they announced this. Totally nuts.

 

[Insane Metal]

Damn. Everyday we see a new big tech company laying off thousands.

 

[feynoob]

The stock dropped over 20% today....

Chip stocks are getting hammered

Guess we are witnessing a downfall of a big company.

 

[Skyfox]

Board will be ok though right? Just employees and customers getting reamed?

Cool

 

[GHG]

Disaster of a company at the moment and honestly having read the report I don't see a pathway back for them any time soon, they are so out of position in every area it's not even funny. If not for The US government subsidies/grants in recent years I dread to think where they would be right now.

To top it all off, killing the dividend means nobody in their right mind will even park money with them while they attempt this turn-around. Clownshow, top to bottom.

This is what happens when you have a complacent arrogant business that thinks it's too big to fail. Given the current rate of their margin decline and the fierce competition for them both domestically and overseas it's not entirely out of the question that they will cease to exist in the next 10-15 years.

They should be embarrassed given the fact that their industry has been in easy mode since the pandemic as far as demand and margins go. To not capitalise on what has been a chips gold rush is insane.

 

[Gambit2483]

Board will be ok though right? Just employees and customers getting reamed?

Cool

The ones fucking up and making the wrong decisions never get punished in a capitalistic system.

 

[dem]

The turnaround was always going to take years... Like closer to 2030.

Stock gets pumped here and there... but I've held off. The potential turnaround is too far off yet...

 

[GHG]

What the hell are they doing over there? And how do you have 19.000 non-essential workers?

Please understand, you need people who are hard working enough to make matcha lattes for the whole office on product launch days.

Stock gets pumped here and there... but I've held off. The potential turnaround is too far off yet...

It's going to the mid teens, better to wait until there are actually tangible signs of a business recovery rather than buy something that's currently looking like the next Blackberry.

 

[Zathalus]

Unable to compete with GPUs, unable to compete with Server CPUs, and unable to compete in the HPC market. The only area they can compete, consumer CPUs, has the most recent product line frying themselves. Mobile chips they are also falling behind AMD on near every metric.

 

[cinnamonandgravy]

 

[Alebrije]

Wow, the is crazy.

 

[Kacho]

That’s an insane amount of people. Holy shit!

 

[GHG]

Unable to compete with GPUs, unable to compete with Server CPUs, and unable to compete in the HPC market. The only area they can compete, consumer CPUs, has the most recent product line frying themselves. Mobile chips they are also falling behind AMD on near every metric.

Their mobile chips and APUs have been dire for some time now but they get away with it because those chips end up in products that are typically sold to the most ignorant and uninformed buyers (both enterprise and consumer).

 

[ChuckeRearmed]

Down 5.5% during the day and then another -17% after hours when they announced this. Totally nuts.

well the stock market in general not in a good shape for now.


But 125k employees is a lot. Nvidia like what? 30k?

 

[GHG]

well the stock market in general not in a good shape for now.

The difference is that most other companies in their sector are up over 100% over the last 12-18 months.

Even when their stock was up well above where they deserved it to be these idiots didn't capitalise on it by raising capital for much needed R&D. Every decision they've made in the last 2-3 years has been the wrong one.

 

[winjer]

Intel should be publishing their quarterly results soon.
I wonder how this will go...

 

[Wooxsvan]

this must be some of yall's first economic down turn. it can get much worse...

hope those affected can find work quickly.

 

[StreetsofBeige]

Stock down to $23 after hours. Worth a gamble if it ever hits $10. I lost money on it second time around (around $7,000). But I'd take a shot again at $10.

 

[cyberheater]

How do you fuck up a company this badly so quickly?

 

[StereoVsn]

Usual Wallstreet driven decisions to appease “the shareholders” that are looking to bump up stock in the short term, but will butcher R&D and future product pipelines.

Fucking ridiculous.

Edit: Bold action would be to fire the Executives and the Board. Clearly they need to fucking go.

 

[Lagspike_exe]

Stock down to $23 after hours. Worth a gamble if it ever hits $10. I lost money on it second time around (around $7,000). But I'd take a shot again at $10.

Absolutely brutal.

 

[StreetsofBeige]

The difference is that most other companies in their sector are up over 100% over the last 12-18 months.

Even when their stock was up well above where they deserved it to be these idiots didn't capitalise on it by raising capital for much needed R&D. Every decision they've made in the last 2-3 years has been the wrong one.

INTC stock has been a lame duck for over 20 years. It peaked during the dotcom craze around $75. Fast forward to recent times and it hit around $50. Now $28. After hours $23 as I type.

Probably one of the only big wig tech stocks since the dotcom era that never took off. In fact it's down 70%. Nuts.

Its not like AMD killed them. Maybe recently AMD has been a beter company but for most of that 24 years, INTC had dominated cpus. I dont follow chip companies (though I buy stocks of them hoping for cash), but I guess Nvidia over the decades just blew past them?

 

[GHG]

Stock down to $23 after hours. Worth a gamble if it ever hits $10. I lost money on it second time around (around $7,000). But I'd take a shot again at $10.

Waiting for the low teens personally, and even then I think it will be high risk if the circumstances remain as they are now.

Usual Wallstreet driven decisions to appease “the shareholders” that are looking to bump up stock in the short term, but will butcher R&D and future product pipelines.

Fucking ridiculous.

Wallstreet aren't even falling for it. It's currently in free-fall after hours.

Their margins and EPS have been butchered, they are forecasting a loss next quarter and the dividend is toast. Unless you already had a sizable position from donkeys ago that you're still up on and you're able to sell call options against it, then there is literally no reason to be in this stock right now at these prices.

Its not like AMD killed them. Maybe recently AMD has been a beter company but for most of that 24 years, INTC had dominated cpus. I dont follow chip companies (though I buy stocks of them hoping for cash), but I guess Nvidia over the decades just blew past them?

Both AMD and Nvidia have blown past them in all areas in recent years.