Intel plans major job cuts to cut costs and fuel turnaround - Bloomberg

Investing.comJul 31, 2024 12:54 AM

Investing.com - Intel Corporation (NASDAQ:INTC) is set to reduce thousands of jobs as part of a strategy to trim costs and support a significant turnaround effort, sources told Bloomberg on Tuesday.

The job cuts, which could be announced this week, come as the company seeks to recover from a period of declining earnings and market share losses.

Sources familiar with the situation, who spoke on condition of anonymity, revealed the plans ahead of Intel's second-quarter earnings report scheduled for Thursday. The company currently employs about 110,000 people, excluding those in units slated for spinoff.

CEO Pat Gelsinger is heavily investing in research and development to enhance Intel’s technology, aiming to reclaim the company’s leading position in the semiconductor industry.

Intel’s dominance has waned under previous leadership as competitors like Advanced Micro Devices Inc (NASDAQ:AMD) have gained market share.

Intel declined to comment on the job cuts.

In response to the news, Intel shares climbed approximately 1.1% in after-hours trading, reaching as high as $31.11.

While other chipmakers, particularly NVIDIA Corporation (NASDAQ:NVDA), have advanced quickly in the development of highly profitable semiconductors designed for AI-related applications, Intel continues to navigate fluctuations in demand for chips used in laptops and desktop computers, which are core to its business.

Gelsinger's strategy also includes constructing factories to produce semiconductors for other chipmakers.

Recently, Intel hired Naga Chandrasekaran from Micron Technology Inc (NASDAQ:MU). as its new chief global operations officer, who will oversee the company's manufacturing initiatives.

In 2023, Intel reduced its workforce by about 5% to 124,800 by the end of the year following job cuts announced in October 2022. The company has also slowed spending in other areas, expecting these cost-cutting measures to save up to $10 billion by 2025.

Wall Street analysts predict that Intel’s second-quarter revenue will remain flat year over year. Revenue growth is expected to pick up slightly in the second half of 2024, with total sales projected to rise 3% to $55.7 billion for the year - a potentially significant turnaround, representing the first annual increase in revenue since 2021.

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