Intel Cuts Jobs and Capex Following Disappointing Results

Intel, a leading semiconductor company, has revealed plans to cut 15,000 jobs and reduce its capital expenditure in response to challenges in the current market downturn. The company is implementing a significant reduction in spending, including a more than 15% reduction in headcount, following what it describes as disappointing results in the second quarter.

The end of Intel's ambitious five-nodes-in-four-years journey is now in sight, prompting the company to shift its focus towards capital efficiency and aligning investment levels with market requirements. As a result, Intel is revising its gross capex projections for 2024, reducing them by more than 20% to between $25 billion and $27 billion, with net capex expected to be between $11 billion and $13 billion. The figures for 2025 are projected to be between $20 billion and $23 billion for gross capex and $12 billion to $14 billion for net capex.

Intel has recently introduced the first devices manufactured using the 18A process technology, including the Panther Lake and Clearwater Forest client and server processors. Additionally, the company has released the 1.0 Process Design Kit (PDK) to support these new products. The 18A parts are set to be launched next year, positioning Intel to compete with devices produced using TSMC's advanced 2nm process technology, with plans for the 14A process in 2026.

In the second quarter of this year, Intel reported revenue of $12.8 billion, a 1% decrease compared to the previous year. Despite challenges in the semiconductor industry, Intel's revenue remained steady from the previous quarter. Looking ahead, the company forecasts revenue in the range of $12.5 billion to $13.5 billion for the next quarter, as the industry anticipates a recovery from the current downturn.

As part of its cost-saving measures, Intel has announced the suspension of its dividend starting in the fourth quarter of 2024. This decision reflects the company's financial struggles, which have also led to the sale of a share in its Irish fab. Intel's CEO, Pat Gelsinger, emphasized the importance of the company's new operating model and upcoming product launches to strengthen its market position and drive profitability.