"It is hard for me to share this news with you It will be even harder for you to read," Intel CEO Pat Gelsinger said in a blog post The company plans to lay off 15% of its workforce as part of a $10 billion cost-cutting plan for 2025

According to The Verge, the layoffs are more significant than the more than 15,000 roles While the figure cited is "more than 15,000," Intel is estimated to employ 125,000 people, and that number could reach 19,000 [Intel has announced that it will cut billions of dollars annually in R&D and marketing spending through 2026 in order to cut costs and meet its $10 billion goal The company plans to cut capital spending by more than 20% this year alone The memo states, "Simply put, we must adapt our cost structure to our new business model and fundamentally change the way we operate"

Intel's recent earnings report did not look promising as the company conveyed a loss of $16 billion in the second quarter of 2024, even though its chips are still found in some of the best laptops Compared to the previous quarter, the company lost more than $437 million In a memo to Intel employees, Gelsinger wrote, "Our revenues have not grown as much as we had hoped and we have not yet fully benefited from strong trends such as AI"

Much of Intel's losses have come from its foundry business, which invests in new factories and extreme ultraviolet (EUV) lithography Sales of current products are relatively stable, and PCs and servers are profitable

An internal memo outlines several areas where Intel needs to improve: reduce operating costs, simplify the portfolio, eliminate complexity, reduce capital and other costs, suspend the dividend, and maintain investment in growth

Is Qulacomm's ARM push a significant threat to Intel? We raved about the Snapdragon X chip in our reviews of the Microsoft Surface Laptop 7 and Dell XPS 13, among others

We spoke with Techsponential industry analyst Avi Greengart about the main issues affecting Intel In a statement to Tom's Guide, he said, "Yield problems are the proximate cause of Intel's poor performance, but competition from Apple, AMD, and now Qualcomm has changed the computing environment that Intel once dominated"

Industry analyst Patrick Moorhead commented on the cause of Intel's problems with X: "It appears that Meteor Lake had yield/throughput issues that negatively impacted gross margins"

However, specifically with regard to Qualcomm, Greengart said, "Qualcomm's successful launch of the Snapdragon X presents a challenge for Intel going forward, but it was not in enough systems last quarter to have a meaningful impact on revenue"

stated

In other words, while Qualcomm is changing things up, it is more of a long-term problem for Intel and not one that will have an immediate impact on revenue managing editor of news and emerging technologies at Tom's Hardware and the site's resident chip According to Paul Alcorn, managing editor of news and emerging technologies at Tom's Hardware and the site's resident chip expert, "Qualcomm is a long-term threat to the laptop market; Intel has already lost sales to Apple's Arm chips, but that threat is largely contained by Apple's closed ecosystem Qualcomm's support of the more open Windows ecosystem is a threat with far-reaching implications"

"Arm is a threat Intel once had a dominant lead in the data center, but it is now unlikely to regain its lost position Most of the major data center operators and hyperscalers are building their own Arm-based chips, and it will be very difficult to regain that revenue," Alcorn continued

Intel's last layoffs occurred in October 2022 The number of employees was cut by just over 7,000, from 131,900 to 124,800 The previous largest layoffs took place in 2016, when the company laid off approximately 12,000 employees

This time, the company will offer employees the option to apply for voluntary layoffs starting next week, adding "enhanced company-wide severance packages for eligible employees"

The memo also outlines the CEO's thoughts on the future: "I do not believe the path before us is easy Nor should it be for you Today is a tough day for all of us, and there will be tough days ahead But as difficult as all of this is, we are making the changes necessary to build on the progress we have made and usher in a new era of growth"