2024-08-03 15:57:41
The semiconductor giant Intel is taking drastic measures: more than 15 percent of the company’s jobs will be eliminated.
Intel CEO Pat Gelsinger put investors off until the second half of this year. But the situation is not going to improve much then either. So now the red pen is being used. The semiconductor giant Intel, which is struggling with losses, is resorting to massive job cuts.
As part of a billion-dollar savings program, more than 15 percent of the company’s 125,000 jobs are to be eliminated. From the fourth quarter onwards, Intel will also no longer pay dividends, the US company announced after the US stock market closed.
Last quarter, Intel posted a loss of just over $1.6 billion, compared to a profit of $1.48 billion a year earlier. Sales fell one percent year-on-year to $12.8 billion, missing analysts’ expectations.
Intel once dominated the chip industry, but then fell behind. Currently, Nvidia, with chips for training AI software, is the benchmark in the industry.
Gelsinger wants to turn things around with new production processes for more efficient chips, but still has a lot of work ahead of him. Gelsinger called the business figures for the last quarter “disappointing.”
Gelsinger’s strategy for Intel’s survival includes becoming more of a contract manufacturer for other chip developers. The company is to master the most modern production processes in order to compete against established producers such as TSMC from Taiwan. At the same time, Gelsinger cleverly positioned Intel as a key element of the plans to bring more chip production back to the West from Asia.
The plans also include the construction of a plant in Magdeburg costing around 30 billion euros, which, according to previous information, will use the most modern production processes. Intel is still waiting for approvals, including for the billions in subsidies that are intended to cushion the costs. The groundbreaking ceremony has so far been targeted for the end of the year – with production starting in 2027.
Gelsinger emphasized that the contract manufacturing strategy remains fundamentally the same. However, until firm orders are received, Intel will be careful not to build up too much capacity. Investment plans have also been adjusted to the expected market development, said the Intel boss, without giving any further details. At the same time, the company wants to reap the benefits of its high investments more quickly. Intel also wants to build new factories in the USA and receive billions in subsidies for this.
And the situation in the second half of the year will also be more difficult than previously expected. Gelsinger had previously often put investors off until the second half of the year, when things were expected to improve. They caused Intel shares to fall by more than ten percent in after-hours trading.