The chipmaker said the financial results and outlook for the second quarter did not meet its expectations.
Chipmaker Intel Corp. announced on Thursday that it would downsize its workforce by 15 percent, or 15,000 roles, to reduce costs after reporting a loss in second-quarter earnings.
“This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history,” Gelsinger wrote in his memo.
“My pledge to you is that we will prioritize a culture of honesty, transparency and respect in the weeks and months to come.”
Gelsinger said that Intel aims to adjust its operating model to align with the new cost structure, given that the financial results and outlook for the second quarter did not meet its expectations.
“Our revenues have not grown as expected—and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low,” he said.
Gelsinger noted that the company will announce next week an “enhanced retirement offering” for eligible employees and offer an application program for voluntary departures.
As part of its cost savings plan, Intel plans to eliminate “overlapping areas of responsibility” and “non-essential work.” The company will also reduce its capital expenditures by more than 20 percent and suspend its stock dividend starting in the fourth quarter of the year.
Zinsner said the second-quarter results were caused by gross margin headwinds from the accelerated ramp of Intel’s AI laptop product, and “higher-than-typical charges” related to noncore businesses and charges from unused capacity.
“By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet,” he stated.
Katabella Roberts contributed to this report.