Intel to cut 15% of workforce and suspend dividend in turnaround push

Intel employs some 4,900 people in Ireland, making it one of the State's largest employers. It has bases in Leixlip and Shannon and has invested more than €30bn here since its establishment 35 years ago

Thu, 01 Aug, 2024 - 22:30

Intel said on Thursday it would cut 15% of its workforce and will suspend its dividend in the fourth quarter as the chipmaker pursues a turnaround centred around its loss-making manufacturing business.

Shares of the California-based company fell 10% in extended trading overnight. The stock closed down 7% on Thursday, in tandem with US chip stocks plummeting after a conservative forecast from Arm Holdings on Wednesday.

A majority of the job cuts will be completed by the end of 2024, Intel said.

Intel employs some 4,900 people in Ireland, making it one of the State's largest employers. Opening here in 1989, Intel has bases in Leixlip and Shannon and has invested more than €30bn in Ireland since its establishment 35 years ago, the company said.

Intel reduced its workforce by about 5% last year to 124,800, after announcing job cuts beginning in October 2022. It has also slowed spending in other areas. The company expected those cost reductions would save as much as $10bn (€9.2bn) by 2025.

Despite its size, Intel's Irish base was largely unaffected by last year's cost reduction measures, with just 130 jobs cut as a result.

Announcing its results yesterday, the company also set out plans to cut operating expenses and reduce capital expenditure of more than $10bn (€9.3bn) in 2025 compared to previous estimates.

Cost savings

In February last year, the company had set out to provide annual cost savings of between $8bn (€7.4bn) and $10bn (€9.3bn) by 2025.

Intel also forecast third-quarter revenue below estimates as the chipmaker grapples with a pullback in spending on traditional data centre chips and increased competition in the personal computer market.

A key force in the PC revolution, Intel is now trailing Nvidia in the booming artificial intelligence processor market while its data centre business is facing threats from a resurgent AMD.

Stumbles in Intel's manufacturing process have allowed AMD to take business, as the latter uses Taiwan Semiconductor Manufacturing Co (TSMC).

Intel expects revenue to be between $12.5bn (€11.6bn) and $13.5bn (€12.5bn) for the quarter, compared with analysts' average estimate of $14.35bn (€13.3bn), according to LSEG data.