Intel is planning to cut thousands of jobs as part of a recovery strategy to address its declining market share, according to a Bloomberg News report on Tuesday, citing sources familiar with the situation.
The chipmaker's shares rose by approximately 1% in extended trading following the report, despite a 40% slump in its stock value this year. When contacted by Reuters, Intel declined to comment on the report.
While Intel remains a significant player in the personal computer and server markets, it has faced challenges in keeping up with the increasing demand for chips used in artificial intelligence (AI) applications.
CEO Pat Gelsinger has spearheaded efforts to restore the company's competitive edge by revitalising its manufacturing capabilities, investing in advanced chip technologies, and exploring new markets. In October 2022, Intel announced a cost-reduction plan involving "people actions," aiming to cut annual costs by $3 billion in 2023. This initiative sought to reduce the company's headcount from 131,900 in 2022 to 124,800 by the end of 2023, according to regulatory filings.
The cost-saving plan was expected to yield annual savings between $8 billion and $10 billion by 2025, as stated by the company in February last year.
Analysts predict that Intel's second-quarter revenue will be roughly unchanged from the previous year, with the data centre and AI segment anticipated to report a 23% decline, based on LSEG data.
Intel, traditionally known for designing and manufacturing its own chips, has been making significant efforts to expand into the foundry business, producing chips for other companies. This diversification is seen as a strategic move to bolster its market position.
Investors are hopeful that the Biden administration's push to promote chip manufacturing in North America, aimed at diversifying supply chains and reducing reliance on Taiwan, will enhance Intel's prospects.
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