Intel has announced a significant workforce reduction of over 15%, translating to approximately 15,000 job cuts, as part of a strategy to save $10 billion by 2025.

To prioritize liquidity and necessary investments, Intel will suspend its quarterly dividend starting in the fourth quarter.

The company plans to cut its capital expenditures by more than 20%, adjusting the budget to between $25 billion and $27 billion for 2024.

CEO Patrick Gelsinger described the layoffs as a consequential change in the company's history, acknowledging the difficulty of the decision in a letter to employees.

These layoffs are aimed at addressing significant challenges Intel has faced in recent years, including instability issues with its 13th- and 14th-generation desktop CPUs.

Despite stable sales in its PC and server businesses, Intel's Foundry division is facing substantial losses, raising concerns about its financial performance.

Analysts indicate that Intel's revenue challenges are linked to a shift towards AI-focused computing, as major data centers prioritize AI and GPU technologies.

The company's stock has dropped over 40% this year due to its lagging position in the AI chip market, raising investor concerns about growth prospects.

While the layoffs may improve Intel's short-term financials, analysts believe they won't be sufficient to redefine the company's position in the competitive chip market.

Gelsinger has described the recent financial results as 'disappointing' and is focusing on new production processes to create more efficient chips.

The announcement regarding layoffs and strategic changes was made on August 1, 2024, during a press release from the company's San Francisco office.