Intel is facing a significant setback in its goal to be a top AI chip supplier. The company plans to cut $10 billion in capital expenditures by 2025 and eliminate 15,000 jobs, or 15% of its workforce, by the end of the year. Intel’s CEO, Pat Gelsinger, called it a tough day for the company.
The decision to reduce expenses comes as Intel’s revenue has declined and failed to meet Wall Street expectations. Despite a larger workforce, Intel’s revenue in 2023 was $24 billion lower than in 2020. To address this, the company will offer retirement packages and voluntary departure options for employees.
Gelsinger acknowledged that the company’s growth outlook has been adjusted based on market conditions. Competitors like Nvidia and AMD have surpassed Intel in revenue and market capitalization. Intel’s Gaudi processor for AI has not been popular with cloud providers, limiting its growth in the AI market.
Although Intel saw growth in PC CPUs, sales of chips for data center servers dropped. The company’s AI PC market is performing better than expected but with minimal profit margins. Intel’s future growth in AI may rely on building applications for edge networks.
Despite the financial challenges, Intel remains committed to its Foundry unit, aiming to compete with Taiwan Semiconductor Manufacturing Co. for semiconductor production. The Foundry unit’s revenue grew, but Intel has a long way to go to catch up with TSMC.
Gelsinger emphasized that the company’s strategy for the Foundry unit remains unchanged, but resources may be limited until more orders are secured. Intel’s focus on AI and semiconductor production will be crucial for its future success in the highly competitive tech market.