Intel Corporation wasn’t just bad. At one point the stock price was down about 7% in extended trading hours. This steep drop happened immediately following the company’s announcement of its financial outlook and restructuring plans. David Zinsner, the company’s chief financial officer, told reporters. He further stressed the immediate need to reduce operating costs as Intel is facing the impact of bad market headwinds.
During a recent interview with CNBC’s Kristina Partsinevelos, Zinsner discussed the company’s plan to cut operating expenses by half. This plan will necessarily result in workforce reductions. The precise total of impacted positions remains uncertain. According to various accounts, management-level positions will take the biggest hit in these cuts. This latest action reflects a larger push to protect operations and financial viability through increased operational efficiency.
That’s a big jump and Intel is expecting $17 billion in op-ex this year. That figure represents a small drop from its prior target of $17.5 billion. On top of that, the company has re-committed to a $2 billion reduction in its 2025 capital expense projections—from $20 billion down to $18 billion. From a financial perspective alone, Intel has an immediate and pressing need to control costs. This follows on the heels of their announcement of a disappointing net loss of $800 million in the first quarter, or 19 cents per share.
The recently announced leadership transition at Intel has further complicated its already complex financial picture. CEO Lip-Bu Tan, who succeeded Pat Gelsinger in December under pressure from board members and investors, has begun reshaping the executive team. To further this vision recently he hired Sachin Katti, the former Microsoft and Google executive, as Intel’s chief technology officer and head of artificial intelligence (AI). As the AI General Manager, Katti will be responsible for shaping Intel’s AI strategy and product roadmap. That’s a central role as the company attempts to wrest back its competitive advantage.
“The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth.” – Lip-Bu Tan
Intel’s long-term commitment to innovation has not changed, despite the financial limitations. The company’s priority right now is figuring out how to use generative AI technologies to improve its product lines and general position in the marketplace. With Katti at the forefront on this initiative, Intel’s mission is clear, to implement and embed cutting-edge AI solutions in their very fabric.
The semiconductor industry is currently experiencing challenges such as supply chain shortages and increased competition. In response, Intel is pursuing moves that reflect a new push from tech giants to reset reactive business model. Intel sees the soon-to-come layoffs and cost cuts as critical steps. Advancing these actions would position the company to better navigate this difficult period.
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