Intel to lay off over 15% of its workforce following Q2 losses

Intel plans to lay off over 15,000 employees as part of major cost-cutting measures

Intel has released their Q2 2024 earnings report, and they do not look good. While Intel has only reported a small revenue decline, the company has reported losses of $1.6 billion. Intel’s IDM 2.0 strategy is expensive to implement, product margins are down, and overall revenue is down 1%. These factors combined have resulted in Intel’s Q2 losses, and Intel now needs to cut costs. To achieve this, Intel plans to lay off over 15% of its workforce.

Below is what Intel’s CEO, Pat Gelsinger had to say about the company’s losses.

Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones. Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation,

These actions, combined with the launch of Intel 18A next year to regain process technology leadership, will strengthen our position in the market, improve our profitability and create shareholder value.

Intel’s job cuts are only part of Intel’s cost-cutting strategy. Moving forward, Intel will be its “noon-GAAP R&D and Marketing” spend, and its administrative costs. While Intel remains committed to its IDM 2.0 strategy, the company’s focus will now be on capital efficiency and investment levels that align with market requirements. In other words, Intel will not be recklessly spending money on new fabs.

Currently, it is unknown how many workers Intel plans to lay off. Current estimates place the number at over 15,000 employees.

Reducing Operating Expenses: The company will streamline its operations and meaningfully cut spending and headcount, reducing non-GAAP R&D and marketing, general and administrative (MG&A) to approximately $20 billion in 2024 and approximately $17.5 billion in 2025, with further reductions expected in 2026. Intel expects to reduce headcount by greater than 15% with the majority completed by the end of 2024.

Intel has stated that the company has met several of its major milestones. The company’s 18A lithography node will be launched next year. The company’s planned Panther Lake and Clearwater Forest 18A products are also on track.

Intel are also getting ready to launch their new Lunar Lake and Arrow Lake processors. These products should help generate revenue for Intel during the second half of 2024. That, combined with Intel’s cost-saving measures, should result in Intel’s return to profitability.

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