Intel to shed at least 15% of staff, will outsource more to TSMC, slash $10B in costs Intel plans to layoff more than 16,000 staff, or at least 15 percent of its workforce, with most cuts coming by the end of the year as the x86 giant scrambles to get its finances under control. "By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet," …
That report had obviously been written by a Generative AI to put a positive spin on things... I shoved the bits in this article back into ChatGPT and asked it to reverse the process, apparently is should have said...
"By slashing our spending, we're desperately trying to salvage our profits and patch up our shaky balance sheet," Intel CFO David Zinsner wrote in the mega-corp's dismal second-quarter earnings report Thursday.
"We're forced to take these drastic measures to scrape together some liquidity and chip away at our overwhelming debt, all while hoping we can still manage to make investments that might, just maybe, offer some long-term value for shareholders."
or the British motorcycle industry. Rested in its laurels as they thought they were so good. Then some upstarts came along with their "monkey" bikes and a "cub" scooter, but they were good. V good and now look. British motorcylces are few and far between and Triumph were rescued by Bloor.
Intel is that - a modern day BSA. Missed the boat with ARM and lower power / high processing (could that be early Honda) and now with Nvidea/AMD on AI (Yamaha and Suzuki)
Boy are they in trouble.
They will be off the S&P lists, dropped off major investment funds, dropped out of many ETFs that are "dividends and capital gains" focused. That will put further pressure on the stock price.
They have debt and I guess, without looking, they have stock-price conditions as terms of their debt. As in, the debt becomes due if stock price collapses.
The semiconductor industry is now in serious turmoil as a result. Chip prices might rise on speculation Intel cannot produce, or will suffer production issues with loss of (expert) staff.
Competitors will cherry-pick their staff. And their customers. And their market share (even more now).
More product lines will be dropped, like VMware under the heel of Broadcom.
Life with Intel now sucks.
May you live in interesting times.
I did find on https://www.intc.com/stock-info/dividends-and-buybacks:
(Note: https://www.intc.com/ is the site you get on when clicking the investors tab of Intel's main site https://www.intel.com/content/www/us/en/homepage.html)
"We have repurchased 5.77 billion shares at a cost of $152.05 billion since the program began in 1990."
That's money very well invested, in bonuses of managers that long left the building that is. Having another 16000+ employees sacked because financials are down the drain now makes it double sad when looking back at this policy.
Meh.
Under US law dividends are taxable to the recipient, while stock buybacks draw no extra taxes.
To many companies and their shareholders buybacks are the preference.
You might equivalently complain about the sum of dividends paid. It is supposed to be a profitable company and shareholders want their payback somehow.
Yeah. There's this thing called "cost of capital", and pumping up the stock price is important to reduce your cost of borrowing, and how much borrowing you have to do. And of course you're correct that stock buybacks have tax advantages in the US.
I don't like to see stock buybacks either, but in terms of corporate finance they often make sense.
Intel has problems, but I don't think we can conclude prima facie that stock buybacks were one of them.
None of this is meant to excuse Intel or these layoffs. I have great sympathy for employees who are laid off; it's one of the (many) reasons why I couldn't be an executive myself, and I'm rarely convinced that layoffs are justified unless a firm is actually unable to bring in sufficient revenue to pay them.
So basically what you are saying is that share buy backs are a way to transfer large amounts of money to already incredibly wealthy people in a way that ensures little or no tax is paid on that money?
The fact that CEOs tend to get paid primarily in shares options had little to do with the decision....
I disagree.
Intel foundry is dying. Intel are outsourcing more and more. TSMC taking more work from them will help kill Intel Foundry, leaving Intel dependant on TSMC for future chips.
I know that Intel has said they will bring processor manufacturing back in house in a couple of years. However, they have to say that, they can't admit that Intel Foundry is dying. And it's likely that the senior people even believe that, it's normal for every layer of management to report a slightly better story to their managers, so the top levels frequently think everything is good when it isn't.
At some point, Intel will realise that it can really save money by ditching the risky, capital intensive Foundry business, and becoming a fabless semiconductor manufacturer. What's more, that would give it a big one-time boost as it sells off it's Foundry assets.
Has it not crossed the mind of the majority of commenters here? These numbers are small in relation to the real quantification of Intel. Just examine the 'down by' numbers in the context of Intel's overall numbers.
Does nobody notice that these are put out to stop the spivs and bookies on Wall St and The City from exaggerating their role in what is called "the economy" which is already totally unrelated to the baseline monetary figures of a number of grossly overvalued and overrated activities, which provide short term and unreal measurement to their actual situation.
Barry
No, we hadn't noticed that it rather than indication that something is wrong in the House of Gelsinger, it's really just a blip and those problems with the Xeons that can trash them will just disappear… Thanks for pointing that out.
Mine's the one with Only The Paranoid Survive by Andy Groves in the pocket.
Nice going. First, get subsidies from any government dumb, desperate and/or corrupt enough to eat up your lies "to create jobs", then cut away the staff.
So hows it going ? If they rehire the thrown out people, does this count towards the "jobs created" number thats the official reason for these subsidies ?
If I'm R&D why am I going to work at Intel ?
I can take my semiconductor physics / wafer design CAD programming / general engineering skillz and go and be a programmer at FANG for 3x the salary - and even if I do get cut in their next jobs round I have a million other software companies to work at.
Or I can specialise in semiconductors, have a choice of 2-3 companies in the USA to work at and hope one of them doesn't axe R&D to please Wall St.
Well, the issue is a longstanding one that could fairly easily be seen years ago.
This is a comment of mine from early 2023:-
https://forums.theregister.com/forum/1/2023/02/01/intel_pay_cuts/#c_4611849
If you look at the Intel & TSMC roadmaps then Intel are in trouble for the next 5 years at least.
Intel has been used to having a process advantage since forever. They've lost it, and can't retain it. By the time "Intel 3" which is supposed to counter TSMC's 3nm process is available in any quantity then TSMC is going to be rolling out their 2nm process. And Intel 3 is going to be equivalent to TSMC's 3nm; not 3nmE which will have then been in volume production for a year and a half at that point.
TSMC has a track record of making conservative guesses on their roadmap and delivering early for their customers; Intel has a track record of over promising and delivering late.
Here's a prediction; Intel will end up buying capacity from TSMC within the next and getting them to fab chip designs and will offload their older internal fabs. Logically that will eliminate the problem of using a previous generation fabbing technology and allow competing on an even playing field. However it'll introduce Intel to a new problem; that of having to compete on design merits; something which Intel has struggled to do against AMD since the AMD 386 turned out the same performance as the Intel 486 chip at a fraction of the price.
While terrible for Intel, it's very good for anybody buying computers (even if you only buy Intel) as your hardware will be faster, cheaper and consume less power than it would otherwise do.
Which so far has been pretty accurate.
I'd say that Intel are going to abandon having their own fabs, so R&D on their next generation hardware is going to vanish, but as above this decision will mean that Intel has to compete on design merits of their hardware, which is going to mean that they are going to want an awful lot more people on their product R&D teams to try and produce competitive designs on the same hardware; something that as above Intel has struggled at since the AMD386 produced more performance than the Intel 486 at a lower cost.
Isn't Intel 3 actually equivalent to TSMC's 5nm process? The first product to ship on that process was the Apple A14 about 4 years ago.
Also, given recent reports from Gamer's Nexus and others about Raptor Lake, it looks like they haven't actually figured out Intel 7 (10nm) yet.
Bottom line.
The architecture was always s**t and they've kept bolting more and more cruft on it.
At this number of micrometres they are 14 atoms wide.
once they loose actual fab they lose the ability to innovate on that axis.
They basically become a fabless code museum, relying on IP law and copyright to stop others copying their ISA
Intel jumped the shark with Broadwell IMO. I recall being distinctly unimpressed with it when asked to benchmark it by Intel sales-folks. Drank power at idle, drank power at full chat, same throughput as our existing Haswells, but hey you could get a very slightly higher peak clock rate - that you would never see in practice because you are maxing out every core anyway... To be fair to them they didn't push their luck - presumably because they had a lunch date with some purchasing bod who was short of a couple of yachts later that week.
This post has been deleted by its author
As others have pointed out. It looks like the 13th and 14th gen desktop and some xeon processors (most of them it looks like now) have degradation flaws from extreme over voltage that Intel has allowed as "recommended Intel defaults" for years since skylake or before, but now they have pushed the chips so much to keep up with AMD that the additional daily juicing is causing degradation of the silicon and making CPUs unstable for certain tasks. Its a mess. Gamers in particular, small as that is on the balance sheet, will be avoiding Intel for the next few years. The knock on being that if ansked they will also steer others away from Intel over this.
The is also a problem with some layers in the CPU oxidising and causing its own problems, the two seem separate but concurrent and Intel will not define what range in date or serial number that they know are effected, even though they have known about this since 2022. Bad times to own or buy Intel.
Further
Related to the layoffs, it was not quoted in this article but on a staff call (I could be wrong but I think it was pat) said:
"we have a lot of wood to chop"
That's referring to people as wood or logs the exact same terms used by Japanese Unit 731 as they experimented on Chinese people. Cutting off limbs while alive and not sedated, deliberately infecting with the bubonic plague (which still exists in chia today for this reason), and other horrific human experimentation.
The head of intel thinks of people as less than human and uses that language openly.
Interesting.
I usual rule of them is the oxide layer is 1/10 the width of the smallest line width of the transistor.
At 14 atoms wide that's 1.4 atomic layers.
Hence the push for more effective oxides.
But if other layers are oxidising that suggests the packaging is not that well sealed. Which is under impressive given what they charge for this.
I wonder if AMD have these issues as well? Because if not......
I worked with a number of Intel people over the years and they had one trait in common - sadly, arrogance. A belief that the they were the annointed ones. They had cash that was swilling around the industry, everyone said 'how high' when they said 'jump.' They thought they'd made it.
I suspect this was an attitude that came from within Intel.
Unfortunately, once you think you're king of the castle, the serfs rise up and behead you.
The irony of this is that the man that made Intel great, Andy Grove, literally wrote the book on staying paranoid. If only Intel had read it.
That I can believe.
Their effective duopoly with MS meant they knew they had the desktop and the revenue funded their fab lines.
Processor not that fast? Just do a device shrink till it's faster.
Roughly effective monopoly --> growing revenue --> "People love us" mindset.
If ever someone comes along that allows their customers to dump them big time that's when they discover how much they were really "loved."
I remember the days when understanding a processor portfolio was reasonably simple.
These days it's utterly impenetrable. If you're buying a laptop, it's pretty much impossible to compare the various versions of i2, i5, i7 across the generations to know which gives the best bang for your buck.
As a consequence of this madness, I suspect a lot of people just go for the cheapest, since there's almost no other metric which provides a clear answer.
It feels a little like their internal project codenames and SKUs have escaped into the real world without a translation table for us mere purchasers to have any idea what we should buy - as very well demonstrated by their latest erroneous claim of shipping 'AI PCs' when they haven't yet launched the product that gets close to the specification required.
I'm sure they're carving out huge numbers of marketers about this round of cuts, but frankly, I'd be keeping a few back to put some sense and order into their product naming and communication.
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