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Months after the federal government gave Intel $8.5 billion in subsidies to bring chip manufacturing back to the U.S., the company announced it would cut 15% of its workforce, or about 17,000 jobs.
The technology company announced the job cuts as part of a larger cost-cutting and restructuring plan.
“This is an incredibly challenging day for Intel. We are undergoing some of the most significant transformations in the history of our company,” Intel CEO Pat Gelsinger said in a memo to employees this week. “Simply put, we must align our cost structure to our new business model and fundamentally change how we run our business.”
Gelsinger added that revenue “did not grow as expected.”
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Months after the federal government gave Intel $8.5 billion in subsidies to revive microchip manufacturing in the U.S., the company announced it would cut 15% of its workforce, or about 17,000 jobs. (Rebecca Noble/Getty Images/Getty Images)
“Our costs are too high and our margins are too low,” he wrote. “Bolder action is needed to address both, especially given our tougher-than-expected performance and outlook for the second half of 2024. This decision is a deep test of my soul and the most difficult of my career. I am committed to prioritizing a culture of integrity, transparency and respect in the coming weeks and months.”
The company’s shares fell 26% on Friday following the announcement.
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The decision to make cuts after receiving an influx of federal funding has raised questions for some.
“Someone please help me understand how this is sensible or fair,” “Making Money” host Charles Payne wrote on XSaturday. “The Biden-Harris Administration has given billions of dollars to the wealthiest corporations in history, including many foreign corporations.”
Intel has approximately 116,500 employees.
The semiconductor giant received a federal grant under the Biden administration’s CHIPS and Science Act, which was signed into law in 2022, to boost semiconductor manufacturing projects in four US states.
The bipartisan bill aims to strengthen U.S. manufacturing, supply chains and national security, and improve competition with China by investing in research, development, and science and technology.
CHIPS and the Science Act allocated more than $52 billion for U.S. semiconductor research, development, manufacturing, and workforce development.
President Biden stands behind a table next to Intel CEO Pat Gelsinger (left) as he tours the Intel Ocotillo Campus in Chandler, Arizona, on March 20, 2024. (Brendan Smiarowski/AFP via Getty Images / Getty Images)
“Obviously market conditions are good in some places and not so good in others and we need to adjust our credit facilities appropriately,” Gelsinger said in an interview. The Wall Street Journal. “The AI explosion is more rapid than we expected, and we need to adapt.”
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Intel’s revenue fell 1% to $12.8 billion as demand for AI chips from companies like Nvidia shifted away from non-AI products. The company lost $1.6 billion in the quarter, compared with a profit of $1.5 billion in the previous quarter.
Intel and the White House did not immediately respond to FOX Business’ requests for comment.
Fox Business’ Suzanne O’Halloran and Landon Mion contributed to this report.
