August 02, 2024 – Following the release of its financial report today, Intel CEO Pat Gelsinger announced a series of “significant cost-cutting measures” in a memo sent to employees. These measures, aimed at aligning the company’s cost structure with its new operating model, include plans to save $10 billion in costs by 2025.
A key part of this strategy involves reducing the company’s headcount by approximately 15,000 positions, representing about 15% of the total employee population. Gelsinger described the decision as “painful” and acknowledged that it would be difficult for employees to receive this news.
In the memo, Gelsinger emphasized the need for fundamental changes in the way Intel operates, citing high costs and low profit margins as major challenges. He explained that the company’s revenue has not grown as expected due to missing out on strong trends like AI, and bold action is needed to address these issues.
Gelsinger also discussed the reasons for the layoffs, pointing out that Intel’s cost structure is currently not competitive. He noted that despite having a higher annual revenue in 2020, the company’s current employee count is actually 10% higher than it was during that time.
To address these issues, Gelsinger outlined a series of actions that will make Intel a leaner, simpler, and more flexible organization. These include reducing operating costs, simplifying the product portfolio, eliminating complexity, and reducing capital and other costs.
Additionally, the company will suspend its dividend payments from the next quarter to prioritize investments in the business and drive more sustainable profitability. However, Gelsinger emphasized that the IDM 2.0 strategy remains unchanged, and the company will continue to make key investments in process technology and core product leadership.
In conclusion, Gelsinger pledged to maintain a culture of honesty, transparency, and respect in the coming weeks and months, as the company navigates these significant changes.
