An important element this week was the announcement of plans to cut 15,000 employees, which had already been discussed at the rumor level beforehand. The reduction of the workforce by more than 15% is part of Intel's mid-term plan to save material resources. By the end of 2025, the company hopes to save $10 billion for more prioritized goals.
As noted by The Verge, the primary goal for Intel regarding staffing cuts is 15%. This means that out of 125,000 active employees at the parent company and its subsidiaries, up to 19,000 people could lose their jobs by the end of next year. Reductions are set to begin this semester, with the majority to occur by the end of the current period. 'We do not take this lightly; we have carefully assessed the impact these actions will have on the Intel family. These are tough but necessary decisions,' commented CEO Patrick Gelsinger on the upcoming layoffs.
Expenses on employee salaries will not be the only area of savings. Each year until the end of 2026, the company will reduce expenses on marketing, research, and development. Capital expenditures this year will be reduced by more than 20% compared to the initially planned level. Optimization will be carried out across all implemented projects and equipment purchases. Operating expenses this year will be reduced by $20 billion, with savings in the next year reaching $17.5 billion, and they will continue to decline into 2026. At the same time, Intel plans to maintain the ability to invest in truly important projects for its development strategy.
Intel expects to keep capital expenditures for the current year in the range of $27 to $25 billion, and partially such a decrease is driven by expectations of weaker demand for the company's products in the second half of the year. Considering the availability of subsidies and attracting partner funds, Intel's own capital expenditures for this year should fall within the range of $11 to $13 billion.
Next year, it is planned to allocate a total of $20 to $23 billion for capital expenditures, with the company requiring $12 to $14 billion in its own funds. Additionally, the company intends to reduce ongoing costs that are passed on to product costs by $1 billion next year. Starting next quarter, Intel will stop paying dividends. All of this combined will allow the company to reduce expenses by $10 billion by the end of 2025.
In an address to Intel staff, the CEO sadly acknowledges that the company's revenue has not lived up to growth expectations, and the timely release of new products and the adoption of new technologies have not yet paid off. Even the upcoming launch of the Lunar Lake family of processors will not act as a catalyst for positive changes in financial dynamics, according to Intel. This is partly explained by the fact that the chips for Lunar Lake production are primarily processed by TSMC, leaving Intel unable to actively influence the production costs of this family. Moreover, these processors require substrate-integrated memory, which is also sourced from external suppliers. The Panther Lake processors, which the company will manufacture in-house using Intel's 18A technology from the second half of next year, will only achieve mass production in 2026.
In the PC and data center segments, Intel's business remains profitable, and the decision to separately report revenues and losses from Intel Foundry negatively impacts the financial statement. This division generated the majority of the company's losses in the first and second quarters of this year, but management hopes that the worst is behind them after the end of 2024.
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Source: 3dnews.ru
