Finance
Intel’s massive job cuts come after it received $8.5 billion in taxpayer money
Months after the federal government ordered Intel $8.5 billion in subsidies To help bring chip manufacturing back to the U.S., the company said it is cutting 15% of its workforce, which translates to about 17,000 jobs.
The technology company announced the job cuts as part of a major cost-cutting and restructuring plan.
“This is an incredibly tough day for Intel as we make some of the most significant changes in our company’s history,” the spokesperson said. CEO of Intel Pat Gelsinger said in a letter to employees this week. “Simply put, we need to align our cost structure with our new business model and fundamentally change the way we work.”
Gelsinger added that revenues “had not grown as expected.”
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“Our costs are too high, our margins are too low,” he wrote. “We need stronger measures to address both – especially given our financial results and outlook for the second half of 2024, which are more difficult than previously expected. These decisions have challenged me to my core, and this is the hardest thing I have done in my career in recent years. I promise that in the weeks and months ahead we will prioritize a culture of honesty, transparency and respect.”
The companies Shares fell 26% on Friday after the announcement.
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The decision to cut jobs after the influx of federal funds has raised some eyebrows.
“Someone can help me understand how this is smart or fair,” wrote Charles Payne, host of “Making Money” on X Saturday. “The Biden-Harris administration has handed over billions of dollars to the richest companies ever, including many foreign companies.”
Intel has approximately 116,500 employees.
The semiconductor giant received federal grants under the Biden administration’s CHIPS and Science Act, which was signed into law in 2022 to advance semiconductor manufacturing projects in four U.S. states.
The bipartisan legislation aims to improve competition with China by strengthening U.S. manufacturing, supply chains and national security and investing in research and development, science and technology.
The CHIPS and Science Act allocated more than $52 billion for U.S. semiconductor research, development, manufacturing and workforce development.
“Obviously the market conditions, some were good and some not so good, and you have to adjust the financial envelope appropriately,” Gelsinger said in an interview with The Wall Street Journal. “The AI spike was much more acute than I expected, and you have to adapt to those things.”
Ask about AI chips of companies like Nvidia have switched from non-AI products, causing Intel’s revenue to fall 1% to $12.8 billion. The company lost $1.6 billion, compared to a profit of $1.5 billion in the previous quarter.
Intel and the White House did not immediately respond to FOX Business’ request for comment.
Suzanne O’Halloran and Landon Mion of Fox Business contributed to this report.
Original article source: Intel’s massive job cuts come after it received $8.5 billion in taxpayer money
