Silicon Valley chip giant Intel Corporation announced a major restructuring plan on August 1, 2024, which includes cutting more than 15,000 jobs, or 15% of the company's total workforce. The move is part of a difficult decision by Intel to respond to financial pressures and slowing market demand, and is part of its strategic transformation.

Details of the restructuring plan

Intel's restructuring plan includes not only layoffs, but also reducing capital spending and suspending dividends, among other measures. The company expects to cut $10 billion in costs through these initiatives by 2025. In a memo to employees, Intel CEO Pat Gelsinger said these are some of the most important changes in the company's history, and while it is painful news, these decisions are necessary for the company's long-term growth.

Intel earnings

1. Financial performance

Intel's revenue for the second quarter of 2024 was $12.83 billion, below market expectations and down 0.9% compared to the same period last year. Earnings per share (EPS) was 2 cents, well below the market expectation of 10 cents, a sharp decline of 84.62% year-on-year. Intel's shares plunged more than 20 percent in after-hours trading after the announcement, a sign of investors' deep disappointment with the company's results.

2. Performance of business units

In terms of specific business unit performance, data center and Artificial intelligence division revenue declined 3 percent, while client Computing Group revenue increased 9 percent year over year. The network and edge computing division saw a slight decline in revenue, while Intel's foundry business saw a 4 percent increase in revenue.

Technological innovation and market prospect

Facing the fierce market competition and technical challenges, Intel is seeking breakthroughs through technological innovation. The company expects to introduce Intel 18A process technology in 2025, which is not only a demonstration of technological progress, but also a key step in regaining Intel's leadership in process technology. Pat Gelsinger emphasized that through the new operating model, Intel will improve operational and capital efficiency, accelerate the IDM 2.0 transformation, and improve the company's profitability and market competitiveness.

Impact of the CPU unstable event

In the first half of the year, Intel also suffered from CPU instability, affecting its brand image and market confidence. With the release of popular console games, users have reported crashes and error issues with 13th and 14th-generation core processors under heavy loads. Although the company said it had taken steps to fix the problems, the incident negatively impacted Intel's reputation.

Conclusion

Intel's strategic transformation is not only an important adjustment to the current market position, but also a thoughtful consideration of the future direction of development. Through job cuts, restructuring and technological innovation, Intel hopes to improve efficiency, reduce costs and stay ahead of the competition in the semiconductor market. However, this process is fraught with challenges, and Intel needs to achieve its strategic goals while ensuring technical stability and boosting market confidence.

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