Where to now for Intel? The company’s turnaround seems to be slipping further out of reach as it posted another quarterly loss and announced plans for another round of lay-offs to cut costs.
More than 15,000 staff will leave the company in the coming months, while others may take early retirement or opt for voluntary parting of ways.
It seems to be the theme for 2024. Just when the sector looked to be pulling itself out of the endless waves of job losses, along comes another company “right sizing” for a new economic reality. For staff, it must be especially disheartening.
Three years ago when the chipmaker revealed its ambitions to become a foundry – manufacturing chips on a contract basis – there was widespread optimism that this would be the future of Intel.
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It was never going to be a quick turnaround. But mounting losses as the company invests in new facilities to help it leapfrog Samsung and slot in behind TMSC may be stretching investor sentiment to breaking point.
Staffing issues and rising construction costs haven’t helped matters. Intel has invested heavily in plants both in Ireland and elsewhere in Europe, but it has been hit with delays. The new fab site in Magdeburg in Germany, originally due to start construction in 2023, was delayed as the company negotiated further subsidies with the government.
In the end, with the costs rising from $17 billion (€15.5 billion) to $30 billion, Intel managed to get the German government to chip in $10 billion. Work is now said to have begun preparing the site.
Intel needs this foundry plan to work. While the chipmaker led the way in PCs, the mobile boom caught it on the hop, giving its competitors a leg up. To date, the company has struggled to cash in on the AI boom, although it is hoping to change that in the coming years.
“We must improve our execution, adapt to new market realities and operate as a more agile company,” said chief executive Pat Gelsinger. “That’s the spirit of the actions we are taking – knowing that the choices we make today, as difficult as they are, will strengthen our ability to serve our customers and grow our business for years to come.”
Optimistic words from Gelsinger, but Intel will need to show it can deliver.
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