Intel Announces Major Job Cuts and Dividend Suspension as it Struggles in AI Chip Market

Intel Corporation has announced significant restructuring measures, including a 15% reduction in its workforce and the suspension of its dividend starting in the fourth quarter. The move comes as the chipmaker faces challenges in the competitive AI chip market and a struggling financial outlook.

The company will cut approximately 17,500 jobs as part of a broad turnaround plan aimed at addressing its lagging position in AI chip technology. Intel’s shares have plummeted more than 40% this year, reflecting investor concerns over its competitive edge and financial performance.

Intel’s CEO, Pat Gelsinger, highlighted the necessity of these steps, stating, “I need fewer people at headquarters and more people in the field supporting customers.” The company is also set to reduce its capital expenditures by over $10 billion in 2025 to streamline costs and improve its balance sheet.

The announcement follows Intel’s forecast of third-quarter revenue between $12.5 billion and $13.5 billion, falling short of analysts’ expectations of $14.35 billion. The company also reported an anticipated gross margin of 38%, significantly below the market estimate of 45.7%.

In addition to job cuts and dividend suspension, Intel is slashing capital expenses by 17% in 2025, bringing them down to $21.5 billion. This move is part of a broader effort to regain technological leadership and address financial strains exacerbated by a decline in data center semiconductor spending and a competitive disadvantage in AI chips.

Intel’s decision to suspend its dividend marks a significant shift, as the company had previously declared a quarterly dividend of 12.5 cents per share. The suspension is aimed at focusing resources on improving financial stability and leveraging its for-hire manufacturing capabilities.