Intel axes 15,000 jobs after sales tumble

Intel, a leading American chip manufacturer, has announced plans to eliminate over 15,000 jobs as part of its strategy to revitalize the company and compete more effectively with its rivals. The announcement, made by Intel's CEO Pat Gelsinger, comes in the wake of disappointing sales figures that have led to a significant drop in the company's stock price, which fell by as much as 20%. This news has not only impacted Intel but has also caused a ripple effect across the technology sector, leading to declines in the stock prices of other tech giants and contributing to a sharp downturn in Asian stock markets. In Japan, the Nikkei share index experienced a notable decline of 5. 8%, marking its largest percentage drop since March 2020, at the onset of the pandemic. The index closed down by 2,216. 63 points, reaching a total of 35,909. 70, which is the second-largest points drop in its history. Concerns about the strength of the US economy have also played a role in this decline. A recent survey of US manufacturing firms has raised alarms about a potential weakening of the economy, leading to increased interest in upcoming US job figures that are set to be released later on Friday. On Thursday, the three major US stock indexes closed lower, with shares of prominent companies like Amazon continuing to decline in after-hours trading. Amazon's shares fell by more than 4% after the e-commerce giant reported a 10% increase in sales, totaling $148 billion. However, this growth represents a slowdown compared to the previous quarter, and the company has forecasted further weakening in the months ahead, which is putting pressure on its profit margins, even as it ramps up investments in areas such as artificial intelligence (AI). Intel has been facing challenges as businesses increasingly turn to competitors like Nvidia, which is renowned for its powerful AI chips. The company reported a 1% year-on-year decline in sales for the three months leading up to June and warned that the second half of the year is expected to be worse than initially anticipated. Pat Gelsinger stated, 'Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. ' He emphasized that the situation calls for 'bolder actions' and that the company must 'fundamentally change the way we operate. ' In response to these challenges, Intel has significantly reduced its investment plans and announced a suspension of dividend payments. Lucy Coutts, an investment director at JM Finn, commented on the situation, stating, 'It's really having to pull back on spending on its data centers and it’s struggling to take market from other providers, so it’s a real shock to the market. ' On a more positive note, Apple has reported better news, with sales rebounding in the spring despite facing challenges in China and a decline in iPhone sales. For the three months leading up to June, Apple generated revenues of $85. 8 billion, reflecting a 5% year-on-year increase and marking a return to growth after a slump at the beginning of 2024. Apple has expressed confidence in its ability to capitalize on the growing use of AI, as enhancements to its software are encouraging customers to upgrade their devices. The company recently introduced new features branded as 'Apple Intelligence' to developers in the US. This new system allows iPhone users to easily record and transcribe phone conversations, create personalized emojis while messaging, and interact more conversationally with Siri, the voice assistant, among other improvements. Tim Cook, Apple's CEO, stated, 'We remain incredibly optimistic about the possibilities of AI and we will continue to make significant investments in this technology. ' During the April to June period, while iPhone sales dipped by 1%, this decline was offset by increased sales of Macs and iPads. Additionally, Apple reported an all-time record in revenue from its services division, which includes offerings such as Apple Pay and Apple News.