US chip-maker Intel has announced plans to cut over 15,000 jobs as it seeks to revive its business and catch up with competitors.
The news sent shockwaves through the tech sector, with Intel’s shares plummeting by up to 20% following the announcement.
The job cuts come as Intel reported declining sales and warned of a tougher second half of the year.
Intel’s challenges have been compounded by a shift in business towards rivals like Nvidia, known for its powerful AI chips.
“Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI,” Intel CEO Pat Gelsinger said in a memo to staff.
He emphasized the need for “bolder actions” and a fundamental change in operations. Alongside job cuts, Intel is slashing investment plans and suspending dividend payments.
The announcement also impacted other tech giants and contributed to a sharp fall in Asian stock markets.
Japan’s Nikkei share index closed down 5.8%, the largest percentage drop since March 2020, with Japanese tech firms among the biggest losers.
The Nikkei ended the day down 2,216.63 points at 35,909.70, the second-biggest points drop in its history.
Concerns about the strength of the US economy also weighed on stocks, with a downbeat survey of US manufacturing firms triggering fears of a weakening economy.
In the US, the three major share indexes closed lower on Thursday, and shares in big names like Amazon continued to fall in after-hours trade.
Amazon shares dropped more than 4% after the e-commerce giant reported a 10% rise in sales to $148 billion, marking a slowdown from the prior quarter.
Amazon also forecast further weakening in the months ahead, putting pressure on margins even as it ramps up investments in areas such as artificial intelligence (AI).
“It’s really having to pull back on spending on its data centres and it’s struggling to take market from other providers, so it’s a real shock to the market,” Lucy Coutts, investment director at JM Finn, told the BBC.
Amid the tech sector’s turmoil, there was positive news from Apple. The company saw sales rebound in the spring, overcoming weakness in China and a dip in iPhone sales.
Revenues in the three months to June were $85.8 billion, up 5% year-on-year, marking a return to growth after a slump at the start of 2024. Apple attributed its growth to AI-powered improvements in its software, which have encouraged customers to upgrade their devices.
Apple recently introduced new features branded as “Apple Intelligence,” including tools that make it easier for iPhone users to record and transcribe phone conversations, generate personalized emojis, and interact more conversationally with Siri. “We remain incredibly optimistic about the possibilities of AI and we will continue to make significant investments in this technology,” said Apple CEO Tim Cook.
Despite a 1% drop in iPhone sales, increased sales of Macs and iPads, along with an all-time record in revenue from its services division, helped Apple post strong results. The services division includes offerings such as Apple Pay and Apple News.
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