U.S. chipmaker Intel is cutting 17,500 jobs—over 15% of its workforce—and suspending dividends to prioritize its struggling manufacturing division. Shares plummeted 20% in after-hours trading Thursday, potentially erasing $24B in market value.
AI Race Heats Up, Intel Falls Behind
While rivals like Nvidia and AMD gain traction in AI chip markets, Intel faces lagging demand for traditional data center semiconductors. CEO Pat Gelsinger stressed the need to 'support customers' by shifting staff from HQ to fieldwork.
Turnaround Strategy Faces Hurdles
Intel's plan to reclaim its edge against Taiwan's TSMC—the world's top contract chipmaker—includes expanding AI processor development and 'for-hire' manufacturing. But rising costs and squeezed margins have forced tough cuts, with layoffs set to finish by late 2024.
Dividend Suspension Sparks Investor Jitters
The company halted its 12.5-cent quarterly dividend to focus on debt reduction. Gelsinger called it a 'competitive' move long-term, but Wall Street reacted sharply: Intel’s stock sank alongside broader chip sector declines after Arm Holdings’ grim forecast.
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