NEW YORK– Shares of US semiconductor maker Intel plunged 28% on Wall Street on Friday morning after the group announced a major social security plan that calls for the dismissal of more than 15% of its staff before the end of the year.
The US giant also lost more than $30 billion in market value, while the share price fell to $20.95, a drop of 28.08% at 14:05 GMT.
Intel, which is lagging behind competitors in chips tailored for generative artificial intelligence (AI), announced Thursday that it aims to reduce its costs by $10 billion by cutting 15% of its workforce, equivalent to about 18,000 employees.
The group’s revenue in the second quarter was $12.8 billion, less than analysts had expected and a year-on-year decline of 1%.
Intel posted a net loss of $1.6 billion, compared with a net profit of $1.5 billion a year earlier. It also announced that it would not pay dividends to its shareholders at the end of the year.
“Our financial results were disappointing in the second quarter, despite achieving key technology milestones,” CEO Pat Gelsinger was quoted as saying in the results press release.
The company faced “headwinds” in the second quarter that slowed production of components for the next generation of AI computers, Chief Financial Officer David Zinsner said. “We are taking proactive steps to improve our earnings,” he said.
Intel’s competitors, such as American semiconductor designers Nvidia and AMD, and Taiwanese chipmaker TSMC, are riding the wave of generative AI launched by OpenAI and its ChatGPT platform in late 2022.
Eager to reduce its dependence on Asia, the United States is spending tens of billions of dollars to revive local semiconductor production, and Intel is one of the beneficiaries of that drive.
However, the company has lagged behind in the most expensive and most in-demand chips at the moment, those suitable for the servers on which generative AI models are tested.
That’s why it’s betting on components for devices with new AI capabilities, including new laptops introduced this year by HP, Microsoft and others.
Source: With information from AFP.
