Hard times have come again for Intel. The chipmaker reported a loss of $1.6 billion for the second quarter of 2024, up from a loss of $437 million in the previous quarter. To deal with this predicament, Intel management is launching a massive restructuring and cost-cutting campaign. The new plan calls for savings of $10 billion by 2025.

As part of this plan, the company announced the reduction of more than 15 thousand employees, which will amount to more than 15% of the total number of employees. Intel currently employs more than 125,000 people, and layoffs could affect up to 19,000 of them. After the announcement of these measures, the company’s shares fell in price by 20%.

In addition, Intel intends to reduce research and development costs annually until 2026, which will reduce capital expenditures by more than 20% already this year. The company also plans to restructure to terminate non-essential projects and review all active initiatives and equipment to ensure cost rationality.

Despite the challenges, Intel’s second-quarter revenue was $12.8 billion, down just 1% year-over-year. At the same time, the company’s products remain profitable, especially in the segment of processors for PCs and servers. However, almost all of the losses came from Foundry’s chip business. Intel is investing heavily in new factories and EUV lithography, leading to an operating loss of $7 billion in 2023 and another $2.8 billion in the second quarter of 2024.

While the company expects to receive up to $8.5 billion in funding from the US government under the CHIPS Act, that doesn’t completely solve the problem. In the past two years, Intel has balanced between profitable and loss-making activities, achieving a cumulative positive result of $1.1 billion from the second quarter of 2022 to the first quarter of 2024. However, recent losses of $1.6 billion negated this effect.

Before

According to the financial report of the company Intel for the 2nd quarter of 2023, it received a profit of $12.9 billion for April-June, while the net profit was one and a half billion dollars.

Intel ended the first quarter of this year with a net loss of $2.8 billion, the worst result in the history of the company.

In the second quarter, the Client Computing Group department, which is responsible for processors and logic sets for personal computers, brought the chipmaker $6.8 billion (-12% compared to 2022), the Data Center and AI Group department – $4 billion (- 15%). , and the Network & Edge Group reported $1.4 billion (-38%) in revenue.

Meanwhile, subsidiary Mobileye brought in $454 million (-1%) for the corporation, while Intel’s semiconductor contract manufacturing business Foundry Services ended the quarter with $232 million in revenue (+307%).