Intel to layoff over 15,000 staff: Learn the memo shared by firm’s CEO

Intel has introduced to cut back its head depend by greater than 15% of its workforce, some 15,000 individuals, to cut back prices. “Our prices are too excessive, our margins are too low,” the corporate’s CEO Pat Gelsinger mentioned in an inside memo despatched to Intel staff on Thursday. Within the letter, Gelsinger additionally mentioned that the software program large can even announce a companywide enhanced retirement providing for eligible staff and broadly supply an software program for voluntary departures subsequent week.

Right here’s the total textual content of the memo shared by Intel CEO

Group,
We have now moved our All Firm Assembly to in the present day, following our earnings name, as we’re saying important actions to cut back our prices. We plan to ship $10 billion in value financial savings in 2025, and this contains decreasing our head depend by roughly 15,000 roles, or 15% of our workforce. The vast majority of these actions might be accomplished by the tip of this 12 months.
That is painful information for me to share. I do know it is going to be much more tough so that you can learn. That is an extremely onerous day for Intel as we’re making a few of the most consequential adjustments in our firm’s historical past. Once we meet in a couple of hours, I’ll discuss why we’re doing this and what you may anticipate within the coming weeks. Prematurely of that, I needed to preview a few of what’s on my thoughts.
Merely put, we should align our value construction with our new working mannequin and essentially change the way in which we function. Our revenues haven’t grown as anticipated – and we’ve but to completely profit from highly effective developments, like AI. Our prices are too excessive, our margins are too low. We’d like bolder actions to deal with each – notably given our monetary outcomes and outlook for the second half of 2024, which is harder than beforehand anticipated.
These selections have challenged me to my core, and that is the toughest factor I’ve finished in my profession. My pledge to you is that we’ll prioritize a tradition of honesty, transparency and respect within the weeks and months to return.
Subsequent week, we’ll announce a companywide enhanced retirement providing for eligible staff and broadly supply an software program for voluntary departures. I consider that how we implement these adjustments is simply as vital because the adjustments themselves, and we’ll adhere to Intel values all through this course of.
Why Now?
Since introducing our new working mannequin, we now have taken a clean-sheet view of the enterprise and assessed ourselves in opposition to benchmarks for high-performing foundries, fabless product firms and company features. This work made it clear our value construction will not be aggressive.
For instance, our annual income in 2020 was about $24 billion greater than it was final 12 months, but our present workforce is definitely 10% bigger now than it was then. There are plenty of causes for this, but it surely’s not a sustainable path ahead.
Past our prices, we have to change the way in which we function – one thing a lot of you shared as a part of our Worker Expertise Survey. There’s an excessive amount of complexity, so we have to each automate and simplify processes. It takes too lengthy for selections to be made, so we have to get rid of forms. And there’s an excessive amount of inefficiency within the system, so we have to expedite workflows.
Key Priorities
The actions we’re taking will make Intel a leaner, less complicated and extra agile firm. Let me spotlight our areas of focus:
Decreasing Operational Prices: We’ll drive companywide operational and value efficiencies, together with the associated fee financial savings and head depend reductions talked about above.
Simplifying Our Portfolio: We’ll full actions this month to simplify our companies. Every enterprise unit is conducting a portfolio assessment and figuring out underperforming merchandise. We’re additionally integrating key software program property into our enterprise items so we speed up our shift to systems-based options. And we’ll slim our incubation give attention to fewer, extra impactful tasks.
Eliminating Complexity: We’ll scale back layers, get rid of overlapping areas of duty, cease non-essential work, and foster a tradition of larger possession and accountability. For instance, we’ll consolidate Buyer Success into the Gross sales, Advertising and Communications Group to streamline our go-to-market motions.
Decreasing Capital and Different Prices: With the completion of our historic five-nodes-in-four-years roadmap clearly in sight, we’ll assessment all energetic tasks and tools so we start to shift our focus towards capital effectivity and extra normalized spending ranges. It will scale back our 2024 capital expenditures by greater than 20%, and we plan to cut back our non-variable value of products offered by roughly $1 billion in 2025.
Suspending Our Dividend: We’ll droop our inventory dividend starting subsequent quarter to prioritize investments within the enterprise and drive extra sustained profitability.
Sustaining Development Investments: Our IDM2.0 technique is unchanged. Having fought onerous to reestablish our innovation engine, we’ll preserve the important thing investments in our course of know-how and core product management.
The Future
I’ve no illusions that the trail in entrance of us might be simple. You shouldn’t both. It is a robust day for all of us and there might be extra robust days forward. However as tough as all of that is, we’re making the adjustments obligatory to construct on our progress and usher in a brand new period of progress.
Once we started this journey, we set our sights excessive, realizing that Intel is a spot the place huge concepts are born and the ability of what’s potential triumphs over the established order. In spite of everything, our mission is to create world-changing applied sciences that enhance the lives of each individual on the planet. And at our greatest, we now have exemplified these beliefs greater than any firm on this planet.
To reside as much as this mission, we should proceed to drive our IDM 2.0 technique, which stays the identical: re-establish course of know-how management; spend money on at-scale, globally resilient provide chain by increasing manufacturing capability within the U.S. and EU; turn into a world-class, modern foundry for inside and exterior clients; rebuild product portfolio management; and ship AI In all places.
Over the previous few years, we now have rebuilt a sustainable innovation engine that’s largely in place and on observe. It’s now time to give attention to constructing the sustainable monetary engine wanted to drive our efficiency. We should enhance our execution, adapt to new market realities and function as a extra agile firm. That’s the spirit of the actions we’re taking – realizing that the alternatives we make in the present day, as tough as they’re, will strengthen our potential to serve our clients and develop our enterprise for years to return.
As we take these subsequent steps in our journey, let’s not neglect that there has by no means been a larger want for what we do. The world will more and more run on silicon – and the world wants a wholesome and vibrant Intel. That’s why the work we’re doing is so consequential. Not solely are we remaking a fantastic firm, however we’re additionally creating know-how and manufacturing capabilities that can reshape the world for many years to return. And that is one thing we must always by no means lose sight of as we push ahead in pursuit of our objectives.
We’ll speak extra in a couple of hours. Please come together with your questions so we are able to have an open and sincere dialogue about what comes subsequent.