US chip maker Intel said on Thursday that the company will lay off more than 100% of its workforce. This year, Intel plans to reduce costs by about 20 billion dollars. It recently reported a loss of $1.6 billion in the last quarter.
“Our Q2 financial performance was disappointing, even as we hit key product and processing technology milestones,” Intel Chief Executive Pat Gelsinger said in an earnings release.
Second-quarter earnings were negatively impacted by Intel’s artificial intelligence PC products and “headwinds” over unused capacity at its facilities, according to chief financial officer David Zinser.
“We are taking proactive steps to improve our profitability and strengthen our balance sheet by implementing our cost reductions,” Zinser said.
Intel reported that it had 124,800 employees at the end of last year, so layoffs could reach 15,000 positions. In June, Intel announced it was halting a major factory expansion project in Israel, which is set to pump an additional $15 billion into a chip plant.
Artificial intelligence revolution:
The decisions are based on business conditions, market dynamics, and responsible capital management, the US-based company said. The belt-tightening comes a month after Intel struck a defiant tone in the face of strong challenges from rivals Nvidia, AMD, and Qualcomm, which unveiled technology it says will lead the artificial intelligence revolution.
For decades, Intel has dominated the market for chips that power everything from laptops to data centers. But in recent years, its competitors — notably Nvidia — have been pushing ahead with specialized AI processors.
In a keynote speech at the Computex Expo in Taiwan, Gelsinger introduced Intel’s latest Xeon 6 processors for servers and shared more details about its next-gen Moon Lake chips for AI PCs. AI is driving a significant era of innovation seen in the industry, Gelsinger said.