Analysts call Intel’s disappointing quarter an ‘historic collapse’ and 'much worse than feared'
CNBCSep 20, 2022
Intel to Lay Off 15K Employees, Cut $10B in Costs
Above: Intel employees walk by a sign as they enter the office August 19, 2010 in Santa Clara, California. Intel has announced that it plans to buy security software maker McAfee for a reported $7.68 billion. Image copyright: Justin Sullivan/Staff/Getty Images News via Getty Images
The Facts
Pat Gelsinger, chief executive officer of Intel, announced on Thursday that the US chipmaking giant is laying off 15% of its staff — or about 15K employees — by year-end to reduce costs in 2025.
In a memo to employees, Gelsinger said that the company — which is "yet to fully benefit from powerful trends, like AI" — aims to save $10B by next year as it required a massive restructuring after posting $1.6B losses in Q2 this year.
The Spin
Narrative A
Intel's layoff plan is undoubtedly painful, but that will save the company $10B by next year. This is necessary to recalibrate Intel's course for the future and protect employment at the company as a whole. The chipmaker remains committed and focused on innovation and AI. Such streamlining is a long time coming and will ensure it continues to lead the technology sector.
Narrative B
Intel is grappling with declining revenues and profits amid the rise of companies like Nvidia in the AI chip market. It plans to pivot towards developing a foundry business to produce chips for other companies, but this strategy requires massive investment. Laying off thousands of employees alone may not be enough to turn Intel's fortunes around.