TMTPOST--Intel, the chipmaking giant, announced plans to cut 15% of its workforce, roughly 15,000 jobs, in an effort to revitalize its business and better compete with rivals such as Nvidia and AMD. CEO Pat Gelsinger, in a memo to employees, outlined the company's goal to save $10 billion by 2025.

Gelsinger emphasized the need to align Intel's cost structure with a new operating model, noting that revenue growth has fallen short of expectations and the company has yet to fully capitalize on trends like AI. “Our costs are too high, our margins are too low,” he wrote.

Following a disappointing quarter and forecast, Intel plans to announce an “enhanced retirement offering” and a voluntary departure program next week. Gelsinger acknowledged the difficulty of these decisions, describing them as the hardest of his career. Most layoffs are expected to be completed this year.

Additionally, Intel will suspend its stock dividend to further reduce costs. The company reported a second-quarter loss and forecast third-quarter revenues below Wall Street's expectations, causing its stock to plunge 19% in after-hours trading, potentially erasing about $24 billion of market value.

Intel posted a loss of $1.6 billion, or 38 cents per share, for the April-June period, compared to a profit of $1.5 billion, or 35 cents per share, a year earlier. Revenue slightly decreased to $12.8 billion from $12.9 billion. Analysts had anticipated earnings of 10 cents per share on revenue of $12.9 billion.

Gelsinger highlighted Intel's investments in the AI PC market, projecting significant long-term benefits despite short-term profit margin pressures. He expects the AI PC market to grow from less than 10% today to over 50% by 2026.

Intel's strategy includes manufacturing chips in addition to designing them, competing with companies like Taiwan Semiconductor Manufacturing Co. (TSMC). Since Gelsinger's tenure began in 2021, Intel has been a major beneficiary of the 2022 CHIPS and Science Act, securing substantial funding and loans for U.S.-based semiconductor plants.

In March, U.S. President Biden announced an agreement providing Intel with up to $8.5 billion in funding and $11 billion in loans, promoting it as a way to "bring the future back to America." Biden has also praised Intel's plans for a new plant in Ohio, which is expected to create thousands of jobs.