Foreign media reports suggest that Intel, following CEO Pat Gelsinger’s announcement of the company’s intention to divide its foundry and product businesses, is planning a restructure of its marketing and sales departments. This reorganization reportedly includes layoffs, although Intel has not disclosed the extent of these layoffs or the number of employees affected.
The reports further state that in October 2022, Gelsinger revealed Intel’s strategy to reduce expenses by up to $10 billion by 2025. This decision comes in response to a significant and unexpected slowdown in demand. The forthcoming layoffs are projected to be part of this cost-cutting plan. The only detail Intel has disclosed, by the Worker Adjustment and Retraining Notification (WARN) Act, is that these layoffs will impact at least 50 employees at its California office over the next 30 days.
The layoffs coincide with Intel’s new financial reporting structure and the announcement of the division of its product and chip manufacturing businesses. Intel reported a $7 billion operational loss in its foundry business for 2023. With the culmination of Intel’s four-year, 5-nanometer plan, the operational loss for the foundry business is expected to peak in 2024.
Intel’s foundry business now operates independently, competing with rivals such as TSMC and Samsung. Intel is planning to manufacture chips for Nvidia, and Nvidia recently selected Intel as one of its GPU packaging providers. Intel is expected to produce over 300,000 H100 GPUs per month for Nvidia. Intel believes the new operational structure will yield profitability for its foundry business, adding $100 billion in unrealized value. The company aims to increase efficiency, lower costs, and boost profitability for the foundry and its products, targeting a 40% gross margin and a 30% operating margin by 2030.
Intel has also stressed its commitment to reshaping the organizational structure of its sales and marketing group to continue implementing its strategy and delivering results to customers. Despite the challenges, Intel remains confident about its future and is dedicated to supporting all employees, including those affected by these changes.
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