'Painful news to share' says Intel CEO Pat Gelsinger as company prepares to lay off thousands of employees

Intel, known for its microprocessor chips that power most computers, recently announced that it will be cutting down 15 percent of its workforce after reporting a loss of USD 1.6 billion in the quarter that ended recently. This decision of the company could impact as many as 19,000 employees, a report in The Verge says. This move is part of a broader strategy to streamline operations and address financial challenges made worse by more competition in the AI chip market.

Intel announces decision to lay off employees

Intel’s decision to lay off employees comes at a time when the company is struggling to maintain its leadership in the chip-making sector. The company’s stock plummeted over 20 percent following the announcement, reflecting investor concerns about its future. As mentioned already, Intel has faced stiff competition, particularly in the AI sector. Rivals like Nvidia and Advanced Micro Devices (AMD) have gained market share with their innovative products tailored for data centers and AI applications.

Intel CEO sends memo to employees about layoffs

The Verge reports that Intel CEO Pat Gelsinger shared a memo with employees in which he described the news as “painful”. In the memo, he also added that this was the “hardest thing” that he had to do in his career.

“We have moved our All Company Meeting to today, following our earnings call, as we are announcing significant actions to reduce our costs. We plan to deliver $10 billion in cost savings in 2025, and this includes reducing our head count by roughly 15,000 roles, or 15% of our workforce. The majority of these actions will be completed by the end of this year.

“This is painful news for me to share. I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history,” Gelsinger wrote as per The Verge.

"My pledge to you is that we will prioritise a culture of honesty, transparency, and respect in the weeks and months to come,” he added.

Gelsinger took over as Intel CEO in early 2021 and has been on a mission to revitalise the company ever since. Some of the biggest changes he made include the introduction of a new plan called IDM 2.0, which included building many new factories in the West and boosting its business of making chips for other companies.

What’s next for Intel?

To conserve cash and streamline operations, Intel will suspend its quarterly dividend in the fourth quarter. The company will also reduce layers of management, eliminate overlapping responsibilities, and halt non-essential work. These measures are expected to drive efficiency and cost savings, helping Intel navigate its financial challenges.