Intel announced a massive workforce reduction, laying off over 15,000 employees as part of a $10 billion cost-saving plan for 2025. The company will also cut non-essential work and review all active projects and equipment to reduce spending.

Intel’s CEO Pat Gelsinger shared the news in a memo to employees, acknowledging the difficulty of the situation. This move comes after Intel reported a Q2 loss of $1.6 billion, a significant increase from the previous quarter’s $437 million loss.

Despite the financial setbacks, Intel’s products remain profitable. The company’s Foundry business, however, has been a major source of losses, with $7 billion lost in 2023 and another $2.8 billion this quarter. Intel continues to receive support from the CHIPS Act, securing up to $8.5 billion in U.S. government funding.]

Intel plans to reduce spend by billions each year. Here’s how it’ll begin.

Intel’s revenue for Q2 was $12.8 billion, down 1% year-over-year. While the PC sales slump ended earlier this year, Intel still faces challenges in the AI server chip market, lagging behind competitors like Nvidia and AMD. The company’s recent entry into graphics has also struggled to impress.

In response to these challenges, Intel plans to introduce its next flagship AI laptop chip, Lunar Lake, though it may only modestly improve the company’s situation in 2025. The follow-up product, Panther Lake, is expected to provide significant benefits by 2026.

Intel’s ongoing restructuring includes suspending its dividend and reducing capital expenditures by over 20%. The company will offer enhanced retirement packages and voluntary layoffs to mitigate the impact on employees. Despite these changes, Intel aims to maintain its core investments and build a resilient semiconductor supply chain.