Tech Giant Faces Revenue Decline, Struggles to Keep Pace with AI Boom
Marrakech – In a dramatic announcement, Intel revealed plans to lay off 15,000 employees, representing over 15% of its global workforce, as part of a larger strategy to reduce spending by $10 billion by 2025. The decision follows a disappointing second-quarter earnings report, signaling the company’s struggles to adapt to emerging trends like artificial intelligence (AI).
In a memo to employees, CEO Pat Gelsinger explained, “Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI.” Intel has faced mounting costs and shrinking margins, prompting the need for “drastic measures” to address financial challenges projected for the second half of 2024.
Despite Intel’s pioneering role in the CPU revolution 25 years ago, the company has lagged behind rivals like Nvidia in capitalizing on the AI boom. From 2020 to 2023, Intel’s annual revenues dropped by $24 billion, despite a 10% increase in workforce during the same period. This stands in stark contrast to other chipmakers that have seen substantial growth in revenue and market value thanks to AI.
Intel reported a 1% year-over-year revenue decline for the second quarter of 2024, which it attributed to challenges with its AI-driven PC products. To further navigate its financial shake-up, the company announced the suspension of its shareholder dividend starting in the fourth quarter of 2024.
As part of the restructuring plan, Intel will also introduce a “voluntary departure” program for employees and an enhanced retirement package for eligible workers, signaling deeper organizational changes ahead. With the AI revolution accelerating, Intel faces mounting pressure to realign its business strategy and compete in a rapidly evolving tech landscape.
