Intel’s stock price nosedived more than 25% on Friday trading, one its worst trading days in 40 years. and said it would cut 15% of its workforce, deepening worries about its ability to catch up with Taiwan’s TSMC and other chipmakers.The layoffs – most of which the company said would take place by the end of 2024 – are part of a $10 billion cost-cutting plan meant to turn around the computer giant.
“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,” he said.The California-based company peaked in the 1990s thanks to the success of the PC. But since the early 2000s, Intel has been facing more intense competition for a share of the market.
The company expects $20 billion in cuts this year on an adjusted basis, and predicted $17.5 billion in cuts in 2025 and more to come in 2026. The plan to skimp on costs comes just a few months after President Joe Biden announced an agreement to provide Intel with $8.5 billion in funding and $11 billion in loans for computer chip factories in Arizona, New Mexico, Oregon and Ohio through the CHIPS Act.Intel said it expects $20 billion in cuts this year, as well as $17.5 billion in cuts in 2025 and more in 2026.The company reported adjusted earnings per share of $0.02, missing LSEG analysts’ expectations of $0.10.
Intel took hits from other financial challenges, like quickly moving its Intel 4 and 3 chip wafers from an Oregon plant to one in Ireland. The company has high hopes for its AI chips. It said it expects more than 40 million unit shipments for the total year.