Updated 07:10 IST, August 2nd 2024
Intel to cut 15% of workforce, suspend dividend in major restructuring
The chipmaker also projected third-quarter revenue below analyst expectations, citing reduced spending on traditional data center semiconductors.

Intel cost cutting: Intel Corp has decided to reduce its workforce by over 15 per cent and suspend its dividend starting in the fourth quarter as part of a major restructuring effort aimed at reviving its struggling manufacturing business.
The chipmaker also projected third-quarter revenue below analyst expectations, citing reduced spending on traditional data center semiconductors and its struggle to compete in the AI chip sector, where it trails behind rivals.
Intel’s stock plunged 20 per cent in after-hours trading, extending its earlier 7 per cent drop on Thursday. The decline wiped out more than $24 billion in market value. The stock's slide follows a pessimistic forecast from Arm Holdings, which had also impacted US chip stocks.
Competitors gain
Despite Intel's struggles, other chip industry players like Nvidia and AMD saw slight gains after hours, reflecting their stronger positions in the booming AI market.
CEO Pat Gelsinger explained the decision to cut jobs and suspend the dividend by emphasizing the need to refocus the company.
"I need fewer people at headquarters and more in the field supporting customers," he told Reuters. Regarding the dividend suspension, he added, "Our goal is to pay a competitive dividend over time, but right now, we are prioritizing balance sheet strength and deleveraging."
The layoffs will affect approximately 17,500 employees out of Intel’s 116,500 strong workforce as of June 29, excluding some subsidiaries. Most of the job reductions are expected to be completed by the end of 2024.
Intel also revealed plans to slash operating expenses and capital expenditures by over $10 billion in 2025, exceeding initial targets. Michael Schulman, Chief Investment Officer of Running Point Capital said, “A $10 billion cost reduction plan shows that management is taking decisive action to address issues. However, there are questions about whether this move comes too late, considering CEO Gelsinger has been leading for over three years.”
The suspension of the dividend may pressure Intel’s stock further, potentially excluding it from ETFs, indices, and funds that focus on dividend-paying stocks.
As of June 29, Intel had $11.29 billion in cash and cash equivalents against current liabilities of about $32 billion. The company's significant investments in expanding manufacturing capacity to compete with Taiwanese chipmaker TSMC have contributed to its financial strain. Intel's shares have fallen more than 40 per cent this year, largely due to its lagging position in the AI chip market.
(With Reuters inputs)
Published 07:10 IST, August 2nd 2024