Intel's $32 Billion Wipeout: Historic Stock Plunge Sparks Major Layoffs and Cost-Cutting Moves

Intel experienced a significant financial setback, wiping out approximately 232 billion yuan ($32 billion) from its market value on August 2. The sharp decline in Intel's stock price—exceeding 28%—marks its largest single-day drop since at least 1982. This dramatic plunge followed the announcement of deeply disappointing financial results for the second quarter of its 2024 fiscal year. The company reported a 1% year-over-year decrease in revenue to $12.8 billion and a notable shift from a $1.5 billion profit to a $1.6 billion net loss. Intel's CEO, Pat Gelsinger, confirmed the company's plans to undertake a massive cost-saving initiative aimed at saving approximately $10 billion by 2025. This plan includes reducing the global workforce by about 15%, translating to roughly 15,000 jobs out of its 100,000-strong global workforce. These reductions will begin by the end of this year. Gelsinger described these decisions as some of the most challenging of his career, emphasizing their necessity for Intel's future stability and competitiveness. The layoffs come as Intel struggles with declining profitability and market share erosion. Intense competition from companies like AMD and Nvidia, who have made significant strides in developing cutting-edge chips for artificial intelligence applications, has placed immense pressure on Intel. Despite substantial investments in research and development under Gelsinger's leadership, Intel's earnings have not met expectations, and its growth forecasts remain grim. The financial turmoil is compounded by Intel's ambitious "IDM 2.0" strategy, which aims to revive its manufacturing prowess. This plan has focused on massive infrastructure investments, including building new foundries in the U.S. and Europe. However, these ventures have yet to yield profitable returns, contributing to a severe operational deficit. In light of these challenges, Intel's move to cut workforce and curb spending appears crucial for its long-term survival. Financial analysts suggest that Intel’s recovery hinges on its ability to innovate and reclaim its technological edge in the semiconductor industry. For now, the company remains in a precarious position, with its market performance reflecting investor skepticism about its near-term prospects. Despite the bleak outlook, Gelsinger reaffirmed a commitment to transparency and respect throughout the restructuring process. He promised to maintain clear communication with employees during this turbulent period, aiming to foster a culture of honesty and resilience as Intel navigates these transformative changes.