Intel to cut thousands of workers as part of a massive restructuring

The company behind the state's biggest economic development project in history said Thursday that it is cutting at least 15% of its workforce as part of a massive global restructuring designed to boost profit and improve efficiency in the years to come.

The cuts by Intel are part of a $10 billion restructuring that the semiconductor company announced after the stock market closed Thursday. It was accompanied by the release of Intel's weak financial results for its April 1-June 30 quarter that sent its shares plummeting by about 30% on Friday to about $21, their lower level in about a decade.

"We are targeting a headcount reduction of greater than 15% by the end of 2025 with the majority of this action completed by the end of this year," Intel CEO Pat Gelsinger told analysts on a conference call Thursday night. "We do not take this lightly and we have carefully considered the impact this will have on the Intel family. These are hard, but necessary decisions. ... Even as we lower overall spending, we will continue to fund the investments needed to deliver our strategy."

The cuts come as Intel continues yo work on its $28 billion investment in Licking County where it is building two factories that will have 3,000 workers.

Intel had 124,800 workers as of the end of 2023 spread around the globe. A 15% reduction will amount to nearly 19,000 workers who will be gone, mostly by the end of the year.

Intel's release did not say where cuts will occur, but Intel's workforce in Ohio is tiny at this point and the semiconductor company continues to emphasize that its expansion plans remain in place.

"Our investments in a global footprint of leading-edge capacity continues to weigh on near-term profitability, but long term, they position us to profitably participate in the largest and fastest-growing parts of the semiconductor market," Gelsinger said.

Construction continues to ramp up at the Ohio site with an expected completion of the factories by 2026-27 and a goal of them becoming operational in 2027-2028. As of the end of 2023, the company reported having 69 workers in the state.

Intel has operations in New Mexico, Arizona and Oregon in the U.S. and in countries around the world. It's investment in Ohio and the three other U.S. sites is expected to top $100 billion, the company has said.

But it figures to take a few years for the investments to start paying off.

Intel said it will cut operating expenses and capital expenditures by more than $10 billion in 2025 compared with prior estimates.

Intel said these actions are meant to provide a clear line of sight toward a sustainable business model while providing the financial resources and liquidity necessary to support the company's long-term strategy.

Intel's shares tanked on the report of the reductions coupled with the company's second-quarter results in which the company missed Wall Street estimates and gave a weak forecast for the rest of the year. It also suspended its dividend.

Intel reported a loss of $1.6 billion, or 38 cents per share, on revenue of $12.8 billion for the quarter, and gave a tepid outlook for the rest of the year.

mawilliams@dispatch.com

@BizMarkWilliams

This article originally appeared on The Columbus Dispatch: Intel to cut thousands of workers as part of a massive restructuring