On Thursday, Intel, the American multinational corporation, announced its second-quarter financial report, with revenues surpassing expectations. However, CEO Liwu Chen announced plans to lay off over 20,000 employees by the end of this year and temporarily halt chip factory construction in Europe and the US. Following this news, Intel’s stock price dropped around 5% in after-hours trading.
In the second quarter, Intel reported revenue of $12.86 billion, exceeding the market’s expected $11.92 billion. Adjusted earnings per share were a loss of 10 cents, within the forecasted range. However, the company’s net loss widened to $2.9 billion, or 67 cents per share, significantly higher than the $1.61 billion and 38 cents per share loss in the same period last year.
The company forecasted third-quarter revenue of approximately $13.1 billion, showing optimism in performance. However, profitability may not meet expectations, with the company anticipating a loss that exceeds Wall Street’s projections.
CEO Liwu Chen expressed that the past few months since taking office have not been easy. The company has already completed a significant portion of the planned staff reductions, amounting to around 15% of the total workforce. It is expected that by the year-end, the total number of employees will be reduced to 75,000. Chen’s goal for this year is to reduce operational expenses by $17 billion.
Chen also announced several additional cost-cutting plans in a memo, emphasizing a focus on the semiconductor outsourcing department, responsible for producing chips for other companies. Currently, this department lacks large key clients for stable operations.
The revenue from Intel’s semiconductor outsourcing business was $4.4 billion, yet it recorded a significant operational loss of $3.17 billion.
Chen mentioned that Intel has canceled the construction plans for semiconductor plants in Germany and Poland and is integrating testing and packaging operations in Vietnam and Malaysia. The company will decide whether to slow down the construction progress of the advanced chip factory in Ohio based on market demand and the ability to attract large customers.
In recent years, Intel’s excessive and rapid investments have led to too much factory dispersion and low utilization rates. In the future, the company will base its developments on confirmed customer orders, promote the 14A process construction, and emphasize that all investments must be economically efficient, without any more blank checks for unrestricted investments.
Chen emphasized Intel’s active efforts to regain market share in the data center chip market and the search for long-term leaders in this business, as competitors like AMD have been aggressively targeting cloud server business in recent years.
He also stressed that he will personally review all chip designs to ensure that each new chip meets the standards before entering production.
As of Thursday’s closing, Intel’s stock price has already risen by 13% this year. Last year, the company’s stock price plummeted by 60%, marking its worst annual performance ever.
(References: Reuters and CNBC)