The US chip manufacturer Intel is in crisis and wants to save ten billion US dollars. The result: 15 percent of jobs will be lost, as will the dividend for investors.
Intel wants to overcome the economic downturn of the past few years with a billion-dollar savings program. The struggling chip manufacturer announced that it would cut more than 15 percent of its total of around 125,000 jobs. “I need fewer people at headquarters and more people in the field to look after customers,” said company boss Pat Gelsinger in an interview.
Save ten billion dollars and no dividend
He wants to save more than ten billion dollars in the coming year. The temporary cancellation of the dividend should also contribute to this. “Our goal is to pay a competitive dividend again over time,” said Gelsinger. “But right now we are concentrating on our balance sheet and debt reduction.”
The Intel boss also wants to cut back on investments. He is targeting spending of between 25 and 27 billion dollars for 2024. Next year, the sum should fall to 20 to 23 billion dollars. It was initially unclear what impact this could have on the planned construction of a chip factory in Magdeburg. The company had originally announced that it wanted to build new factories in various countries for several dozen billion dollars.
Intel shares plummet
Investors reacted to the austerity measures by selling. Intel shares fell by around 20 percent after the market closed. That was the biggest drop in share prices in four years.
“The austerity program shows that management is prepared to take drastic measures to turn things around and solve the problems,” said Michael Schulmann, chief investor at asset manager Running Point. “But we wonder whether that is enough.” The decision also comes a little late, as Gelsinger has already been leading the company for three years.
Due to the boom in artificial intelligence (AI), demand for classic processors for data centers is falling. Intel has so far lacked a competitive AI chip to compete with global market leader Nvidia. Arch-rival AMD started to catch up a few days ago by purchasing AI developer Silo AI and provided an optimistic outlook when presenting its business figures.
Sales decline by one percent
At Intel, however, sales in the second quarter fell by one percent to 12.8 billion dollars, as expected. For the current quarter, the US company forecast revenues of between 12.5 and 13.5 billion dollars, around one billion dollars less than stock market analysts had predicted.
Source: Stern
