The company, headquartered in Santa Clara, did not disclose the number of employees in the Bay Area that will be affected.
On Thursday, Intel confirmed its plan to eliminate around 15,000 positions, which constitutes 15% of its global workforce of approximately 100,000 employees. The company will also halt dividend payments starting in the fourth quarter until cash flows improve.
This significant reduction marks one of the largest mass layoffs by any company since the onset of the COVID-19 pandemic. The company, headquartered in Santa Clara, did not disclose the number of employees in the Bay Area that will be affected. Earlier this year, Tesla laid off about 14,000 workers, while Google reduced its workforce by around 12,000 in 2023.
Intel reported disappointing second-quarter earnings and announced a $10 billion cost-cutting measure. Consequently, its shares dropped by approximately 20% in after-hours trading, wiping out $24 billion in market capitalization.
The company's sales for the quarter were $12.8 billion, reflecting a 1% year-over-year decrease. Revenue for the current quarter is projected to be between $12.5 billion and $13.5 billion, falling short of the average analyst estimate of $14.38 billion.
"This is an incredibly difficult day for Intel as we are implementing some of the most significant changes in our company’s history," said Intel CEO Pat Gelsinger in a memo to employees. "In simple terms, we must align our cost structure with our new operating model and fundamentally alter the way we operate. Our revenues have not grown as expected, and we have yet to fully capitalize on powerful trends like AI. Our costs are too high, and our margins are too low."
Gelsinger outlined Intel's goal to become a leaner company by focusing on several key priorities, including reducing operating expenses to $17.5 billion by 2025, simplifying its portfolio, and cutting underperforming products. Additionally, Intel plans to integrate its customer success team into the sales and marketing group, among other cost-saving initiatives.
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