Intel, the US semiconductor giant, is set to cut 15,000 jobs as part of an aggressive effort to revitalize lagging manufacturing operations and keep up with the competitive artificial intelligence chip market.
Shares of the California-based company fell 20% in after-hours trading in New York to $29.05 after announcing a major cost-cutting strategy and forecasting lower-than-expected revenue for the current quarter. Intel also said it would suspend its dividend.
Intel’s workforce reduction, which represents 15% of its total employees, is expected to be largely complete by the end of 2024. The move is part of a broader initiative to reduce operating expenses and cut capital spending by more than $10 billion by 2025.
“I need fewer people at headquarters, and more people in the field, supporting customers,” said Intel CEO Pat Gelsinger.
Investor concerns about Intel’s position in the AI chip race have already sent the company’s shares down about 40% this year. The company has been struggling with declining demand for traditional data center chips and rising competition in the PC market.
For the next quarter, Intel expects revenue of between $12.5 billion and $13.5 billion, well below analysts’ average estimate of $14.35 billion, according to LSEG data.
Commenting on the dividend suspension, Gelsinger said: “Our goal is to reinstate dividends and ensure they remain competitive over time. However, our current focus is on the balance sheet and reducing debt. We believe that reducing debt and capital investments provide greater returns to shareholders at this time than dividend payments.”