Intel to cut 15% jobs, suspend dividend in turnaround push; shares plummet

Intel said on Thursday it would cut more than 15% of its workforce, some 17,500 people, and suspend its dividend starting in the fourth quarter as the chipmaker pursues a turnaround focused on its money-losing manufacturing business.

It also forecast third-quarter revenue below market estimates, grappling with a pullback in spending on traditional data center semiconductors and a focus on AI chips, where it lags rivals.

Shares of Santa Clara, California-based Intel slumped 20% in extended trade, setting the chipmaker up to lose more than $24 billion in market value. The stock had closed down 7% on Thursday, in tandem with a plunge in U.S. chip stocks after a conservative forecast from Arm Holdings on Wednesday.

The results did not rock the broader chip industry.

AI powerhouse Nvidia and smaller rival AMD ticked up after hours, underscoring how well-positioned they were to take advantage of the AI boom, and Intel’s relative disadvantage.

“I need less people at headquarters, more people in the field, supporting customers,” CEO Pat Gelsinger told Reuters in an interview, talking about the job cuts. On the dividend suspension, he said: “Our objective is to … pay a competitive dividend over time, but right now, focusing on the balance sheet, deleveraging.”

Intel, which employed 116,500 people as of June 29, excluding some subsidiaries, said the majority of the job cuts would be completed by the end of 2024. In April, it declared a quarterly dividend of 12.5 cents per share.

Intel is in the middle of a turnaround plan, focused on developing advanced AI processors and building-out its for-hire manufacturing capabilities, as it aims to recoup the technological edge it lost to Taiwan’s TSMC, the world’s largest contract chipmaker.

The push to energize that contracting foundry business under Gelsinger has increased Intel’s costs and pressured profit margins. More recently, the chipmaker has said it will cut costs.

On Thursday, Intel announced it would cut operating expenses and reduce capital expenditure by more than $10 billion in 2025, more than it initially planned.

“A $10 billion cost reduction plan shows that management is willing to take strong and drastic measures to right the ship and fix problems. But we are all asking, ‘is it enough’ and is it a bit of a late reaction considering that CEO Gelsinger has been at the helm for over three years?” said Michael Schulman, chief investment officer of Running Point Capital.

The company had cash and cash equivalents of $11.29 billion, and total current liabilities of about $32 billion, as of June 29.