Massive Changes In Store for Intel, Starting with Job Cuts

Another massive round of layoffs is coming up as Intel announces job cuts at the company. As a part of Intel’s cost-cutting measures and its ambitions to reshape the business entirely, the company will let go of more than 15 percent of its workers in the upcoming months. The company currently employs over 125,000 workers according to The Verge, and the number of employees affected by Intel’s job cuts could range between 15,000-19,000. There is no clear timeline for when they will begin the process, but the CEO intends to complete the process by the end of this year.

Image: Intel CEO Pat Gelsinger

“The Most Consequential Changes in the Company’s History,” Intel Job Cuts Inevitable

Intel’s layoff plans for 2024 are a hard pill for us to swallow, but it must be harder still for the company and the affected employees. Despite its long history of being one of the most well-known chipmakers, Intel has been struggling to keep up with the competition and meet its own quarterly benchmarks. 

In a memo to employees announcing the news regarding the layoffs, CEO Pat Gelsinger explained that their annual revenue in 2020 was $24 billion USD higher than it was last year, however, their workforce has grown by 10 percent. These numbers make their current business model unsustainable. The company has struggled to keep up with popular trends like AI as their “costs are too high” and their ”margins are too low,” and this has only widened the gap between their products and what the competition can offer. Companies like Nvidia were quickly able to capitalize on the AI revolution in their hardware segment. 

“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.”

—Intel CEO Pat Gelsinger on the layoff plan for 2024

From the company’s Q2 2024 report, it is evident that its revenue of $12.8 billion USD has gone down 1 percent year over year, which has played a large part in Intel’s cost-cutting measures to reduce spending by $10 billion USD in 2025. The company’s stock has fallen by nearly 40 percent this year, amidst everything else the company has been dealing with. 

Intel’s cost-cutting measures solidify the company’s desire to reshape the nature of its business entirely. However, the results of the change will only be obvious a few years down the line. The company is also reeling from the impact of two generations of their chips turning out to be defective desktop CPUs, for which there is reportedly no fix. In light of all this, Intel’s layoff plan for 2024 signals the way forward.

Image: Intel

Everything That Will Change to Aid Intel’s $10 Billion Spending Cut

Explaining the job cuts, CEO Gelsinger explains that Intel’s cost-cutting measures go beyond bringing down the headcount to cut expenses. He also points to the Employee Experience Survey conducted among workers, which has reportedly indicated that there is too much complexity in their systems, and the company needs to automate and simplify processes to improve how they work. 

In order to make “Intel a leaner, simpler, and more agile company,” they aim to make company-wide changes to reduce operational costs and simplify the company’s business portfolio, addressing underperforming products as soon as possible. With the intention to eliminate complexity, the organization will eliminate overlapping areas, stop non-essential work, and foster a culture of accountability. 

The company will also reduce its 2024 capital expenditures by more than 20 percent and the non-variable cost of goods sold by approximately $1 billion USD in 2025. Suspending stock dividends next quarter and maintaining growth investments with their IDM2.0 strategy are also measures that are on the cards. 

Which Teams Are to Be Affected by the Intel Job Cuts?

As for Intel’s layoffs of over 15,000 workers, it doesn’t appear as though the exact list of candidates who will be affected has been mapped out yet. The company intended to make a companywide enhanced retirement offering for specific employees who are eligible as well as a broader offer for voluntary departure. 

Those who agree to move out willingly can take the offer and try their luck at another organization without having to be forced out by the organization. The details of the offer or any upcoming severance packages have not been announced, but the company intends to “adhere to Intel values throughout this process.” The company hasn’t specified a fixed timeline for these changes but they intend to execute their headcount reduction strategy by the end of this year.

The scale of Intel’s upcoming job cuts is more vast than anything we’ve seen recently from the likes of Google, Indeed, Microsoft, Intuit, etc. although other companies have invested in multiple rounds of layoffs over the year rather than dealing a big blow at once. 

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