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Intel cuts 15% of its employees and halts European factory expansion!
industry7 months before
Summary：Intel announced a 15% workforce reduction, bringing its global workforce down to 75,000. It also halted construction of factories in Germany and Poland and postponed a new one in Ohio, highlighting losses and capital pressures in its foundry business. Second-quarter revenue of $12.86 billion beat expectations, but the company reported a net loss of $2.9 billion, sending its stock price down 5% after hours. #IntelLayoffs #Foundry #AIChips #18AProcess #InvestmentRisk
Layoffs and expansion halted: a tightening plan under capital pressure
Intel announced a 15% workforce reduction, reducing its workforce from 99,500 by the end of 2023 to 75,000. The company also halted plans for new factories in Germany and Poland and postponed construction of an advanced chip fab in Ohio, USA. This means that every investment must be economically viable to avoid idle capacity and wasted capital.
CEO Lip-Mu Tan bluntly stated that in the past few years, the company "invested too much, too early." In the future, wafer foundry investments will only be made after orders are confirmed. The company will abandon the fantasy of "build it and they will come" and focus its efforts on the 1.8nm 18A process, with mass production scheduled for the second half of 2025.
Wafer foundries continue to suffer losses, PC chips are weak, but AI remains bright
Intel Foundry's second-quarter financial report showed that its revenue increased by 3% year-on-year to US$4.4 billion, but its operating loss was as high as US$3.17 billion (source: Nikkei Asia). Its PC chip business revenue decreased by 3% year-on-year to US$7.9 billion, showing no signs of recovery. In contrast, data center and AI chip revenue increased by 4% year-on-year to US$3.9 billion.
This also exposed Intel's weakness in competing against TSMC and Samsung, as it adheres to its IDM (Integrated Device Manufacturing) model. AI became the sole bright spot, with Lip-Mou Chen personally reviewing all AI chip designs in an effort to recapture the data center market.
The financial report was slightly better than expected, but the company still suffered a loss of US$2.9 billion, and its stock price fell 5% after the market closed.
Second-quarter revenue was $12.86 billion, beating market expectations of $11.92 billion. However, the company reported a net loss of $2.9 billion, primarily due to an $800 million write-down (source: financial report data). Adjusted per-share losses were still $0.10, well below the market's consensus profit of $0.01 per share.
Looking ahead to the third quarter, revenue is projected at $12.6-13.6 billion, still struggling to escape losses. Investors are concerned about widening losses and reduced production at the foundry, sending its stock price plummeting nearly 5% after hours.
Can AI and the 18A process reverse the downward trend? Investors remain on the sidelines.
In the field of AI, Intel is attempting to break through through innovations in both inferential AI and agent-based AI. However, industry analysts believe that only if the 18A process reaches mass production as planned and secures a major US government order can it overcome its technical and financial difficulties; otherwise, its strategy remains highly uncertain.
For investors, this presents both a potential bargain hunting opportunity and a warning sign of potential risks. In the short term, the stock price may remain under pressure, while the long-term outlook depends on whether 18A can deliver on its promises.
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