Intel shares sank 9pc today after the company’s chief executive said it will lay off about 15pc of its employees this year, some 24,000 people. Lip-Bu Tan also said it would take a “fundamentally different approach to building our foundry business”, as he tries to revive the struggling American company.
In a memo to staff, Mr Tan said Intel had already completed a “significant amount” of its planned workforce reductions in Q2 of this year, reducing the number of management layers by about 50pc. “We plan to end the year with a global workforce of about 75,000 employees as a result of reductions and attrition,” he said.
Intel employs about 4,900 people in Ireland, and some of the job cuts have come at its plant in Leixlip, Co Kildare. Last month the company informed the Department of Enterprise that up to 195 staff could face compulsory redundancy.
Mr Tan also said that Intel will stop work on two plants in Germany and Poland, and slow another in Ohio, as he scrapped his predecessor’s strategy that relied on building costly facilities. The announcement followed a surprise second-quarter adjusted loss and a forecast for a bigger-than-expected loss in the third quarter.
Mr Tan called the investments begun under his predecessor, Pat Gelsinger, excessive and unwise. “I do not subscribe to the belief that if you build it, they will come,” he said on a conference call with analysts.
in the memo to staff he said: “Over the past several years, the company invested too much, too soon – without adequate demand. In the process, our factory footprint became needlessly fragmented and underutilised. We must correct our course.”
Mr Gelsinger had an ambitious plan to turn Intel into a chip foundry, a business that makes products for outside clients. A key part of that was moving toward a more advanced production technique, 14A. Mr Tan has indicated that Intel will only introduce that technology cautiously.
Intel will reduce capital expenditures on new plants and equipment this year and plans to make further cuts to that budget next year. The company will spend about $18bn this year and less in 2026, executives said.
The disclosures “revive long-unanswered questions on the chances of success for its foundry business and… what the path forward is if Intel does not develop leading edge manufacturing capability,” TD Cowen analyst Joshua Buchalter said.
“It’s hard to understate the significance of this potential outcome in the context of the history of the semiconductor industry.”
Additional reporting, Reuters
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