The American technology giant Intel has announced that it will lay off nearly 18,000 workers and reduce capital spending to stabilize the operations of its loss-making chip manufacturing division.
– “I need fewer people at headquarters and more in the field, with customers,” said CEO Pat Gelsinger.
Approximately 17,500 workers will receive layoffs, most of them by the end of the year.
As of June 29, Intel had 116,500 employees, excluding certain subsidiaries.
The company also announced that it will reduce operating costs and capital expenditures by more than $10 billion next year, more than previously planned.
Capital expenditures are expected to amount to $21.5 billion next year, which means they will be lower than in 2024, according to the midpoint of the range provided in the official forecast, Reuters notes. This year, they are expected to remain at last year’s level.
Intel concluded the second quarter with a net loss of $1.6 billion. In the same period last year, it recorded a net profit of $1.5 billion. The chip manufacturing division operated with a net loss of $2.83 billion, an increase of 51.3% compared to last year.
The American giant has notably lagged behind Taiwan’s TSMC in acquiring lithography machines for chip production based on ultraviolet technology and is now trying to catch up. In April, they assembled the new High NA EUV machine from Dutch ASML for the first time.
The new machines are more expensive, but Intel believes they will help in producing smaller components on chips, which will ultimately be better than those of competitors.
The management has also decided to suspend dividend payments in the fourth quarter.
– “Our goal is to eventually pay a competitive dividend, but right now we want to focus on the balance sheet, on deleveraging,” said Gelsinger.
