Intel Corp (NASDAQ:INTC) is set to slash its workforce after receiving billions of dollars from the federal government.
The tech giant said it plans to cut 15% of its workforce, or about 15,000 jobs, after it received $8.5 billion in grants from the U.S. government, Fox Business reported.
The funding came from the Biden Administration's CHIPS and Science Act, which in August 2022 earmarked $280 billion for science and technology research in the U.S. About $52.7 billion of that is focused on boosting domestic development of semiconductors.
Intel said the job cuts are part of a massive cost-cutting and restructuring plan for the company, which on Aug. 1 reported second-quarter revenue of $12.8 billion, down 1% from a year ago, and a loss per share of $0.38.
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The company said in the earnings report that it would carry out a more than 15% headcount reduction to "resize and refocus" the company, but it did not mention the heavy government grant.
"This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company's history," Intel CEO Pat Gelsinger said in a note to employees. "Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate."
He also said that revenues hadn't "grown as expected."
"Our costs are too high, our margins are too low," he wrote. "We need bolder actions to address both — particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected."
Price Action: Intel was down 1.6% at $19.38 at the time of publication Wednesday.
Exchange-traded funds were mixed at the time of publication.
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