Intel is Again Cutting More Jobs

Source Credit : Reuters

Intel is going to end the year with a workforce that is over a fifth smaller than last year, it said on Thursday, and new CEO Lip Bu Tan presented a blueprint for a more cost-disciplined, streamlined chipmaker that would issue "no more blank checks."

The job cuts - a majority of which have been completed already - are part of an effort by Tan since he took the helm in March to turn around the storied U.S. chipmaker. Intel has divested businesses, laid off employees and redirected resources.

The company has underperformed due to years of management blunders. Intel has virtually no foothold in the booming AI chip industry that is dominated by Nvidia , and its longtime rival AMD has been gaining share in Intel's mainstay personal computer and server semiconductor markets. Its ambitious and costly plan for a chip contracting business that rivals that of Taiwan's TSMC has failed to take off.

But Tan on Thursday signaled that he had taken charge of the company and was trying to wrest it back from what he viewed as previous missteps.

"There are no more blank checks," Tan wrote in a memo to employees. "Every investment must make economic sense. We will build what our customers need, when they need it, and earn their trust through consistent execution."

But shares still fell 4.5% in extended trading after the company forecast steeper third-quarter losses than Wall Street estimated. Tan also told analysts on a conference call that he believes Intel's so-called 18A manufacturing process - in which his predecessor Pat Gelsinger had deeply invested - could generate a reasonable return only if it is used for Intel's own products. Reuters reported earlier this month that Tan is debating whether to quit offering that technology to external customers.

As part of the job cuts, Intel attempted to take a “surgical” approach and remove layers of middle management, finance chief David Zinsner told Reuters. “We took out about 50% of the layers of the company,” he said.

The company is cutting its workforce by 15% from 96,400 that it reported at the end of June. It plans to further reduce headcount to 75,000 by the end of the year, down 22% from the end of 2024, which will be through attrition and "other means," according to the company.