With an unexpected action that sand shockwaves through tech industry, In the most recent major tech layoff, Intel announced that it is laying off 15,000 workers, or 15% of the whole workforce.
CEO Pat Gelsinger justified the move in a memo to staff members, citing subpar financial results and an immediate need for cost reduction.
A Dark Day for Intel:
Friday saw the largest decline in Intel stock prices since 1974 as the chipmaker said it will be laying off over 15% of its workforce in addition to reporting a significant failure on earnings for the June quarter. The price of the stock is at its lowest point since 2013.
However, Intel’s circumstances are the most significant in recent memory. Over the previous few years, the company’s revenue has been declining; the most noticeable decline took place between 2021 and 2023. From $79.0 billion to $54.2 billion, revenue decreased by approximately 31.4%.
The Reasons Behind the Layoffs:
In a memo, Intel CEO Pat Gelsinger stated, “Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI.” “Our margins are too thin and our costs are too high.” We must take more decisive action to solve both, especially in light of our financial outcomes and the challenging forecast we have for the second half of 2024.
Even though Intel is still a major player in the market and powers a vast number of devices, the company has lagged behind competitors it had been crushing for years due to its inability to predict the mobile chip boom that coincided with the release of the iPhone and its inability to keep up during the recent AI race.
The Impact on Employees:
The affected employees’ loss is considerable due to this layoff. These workers now confront numerous obstacles in the labor market, and remaining workers can experience burdens and problems at work. Workers in departments like sales and marketing that are experiencing large layoffs may be concerned about their future employment opportunities.
But there will be more retirement options and voluntary leave programs available to the affected employees. Gelsinger emphasized that these adjustments will be implemented in a way that aligns with Intel’s values. In order to sustain long-term profitability and give priority to corporate initiatives, the company decided to defer its equity dividend.
A Call to Action:
As Intel navigates this difficult period, it’s clear that drastic measures are needed to ensure the company’s survival. Will this layoff be enough to stem the bleeding, or is it just the beginning of a larger overhaul? Only time will tell.
Stay tuned for more updates on this developing story…
