Intel publishes not very good quarterly results and reacts with a major savings plan. Fifteen percent of the global workforce must be available at short notice.

After disappointing quarterly results with a slight year-on-year decline in revenue, Intel CEO Pat Gelsinger is proposing drastic measures. He notes that Intel’s cost structure no longer matches its operating model. Revenue is not growing as expected, which means costs are too high and margins are too low.

The measures are strict: about fifteen percent of the total workforce must be cut, which equates to about 15,000 layoffs. Intel will try to encourage voluntary departures and retire employees where possible. However, the majority of the decline will be caused by mass layoffs.

Less fluctuation, more people

Gelsinger describes the decision as the most difficult of his career and uses an example to illustrate why it is inevitable: In 2020, Intel generated $24 billion more in revenue than the previous year, but its workforce grew by ten percent during that period. This situation is neither competitive nor sustainable, it seems.

The way Intel works needs to be overhauled. Operational complexity must disappear and be replaced by simplicity and automation. Gelsinger wants to reduce bureaucracy and make the company faster and more agile.

Gelsinger wants to make Intel more competitive by simplifying its portfolio. For its own products, Intel will increasingly work with external manufacturers, especially with TSMC.