US chip manufacturer, Intel, who provide thousands of jobs in Ireland, has announced that it will cut 15% of its workforce worldwide, amounting to up to 15,000 job losses, after announcing financial results that failed to meet even lowered expectations for the second quarter of 2024.
The company said it was seeking to deliver $10 billion in cost cuts in 2025, and that most of the job cuts were now planned to take place before the end of this year.
Intel CEO Pat Gelsinger said that the job cuts were “painful news” to share, and that most of the job slashes would be focused in the areas of marketing and research and development, saying the company will “stop non-essential work,” and review “all active projects and equipment”.
“We plan to deliver $10 billion in cost savings in 2025, and this includes reducing our head count by roughly 15,000 roles, or 15 of our workforce,” said Intel CEO Pat Gelsinger.
“The majority of these actions will be completed by the end of this year. Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low.”
“Our annual revenue in 2020 was about $24 billion higher than it was last year, yet our current workforce is actually 10pc larger now than it was then. There are a lot of reasons for this, but it’s not a sustainable path forward,” he said.
“I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history,” Mr Gelsinger said in a message to Intel employees. “Our revenues have not grown as expected and we’ve yet to fully benefit from powerful trends, like AI.”
“Our costs are too high, our margins are too low. 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,” he said.
“These decisions have challenged me to my core, and this is the hardest thing I’ve done in my career,” he added.
He said Intel would offer an application programme for voluntary departures from the company, and retirement packages would be enhanced.
A previous October 2022 cost-cutting announcement led to 130 redundancies in Intel’s Kildare plant, but in October last year, Intel opened a new manufacturing facility in Leixlip, which doubled the company’s manufacturing space in this country.
Yesterday, in an analysis of the potential job losses on this platform, Matt Treacy said that “despite the 2022 scare over layoffs Intel was issued that year with 364 work permits for employees from outside of the EU/EEA. Similar work permit statistics are available for other major corporations in the technology sector. That means not only are most of the corporation earnings here exported but, as figures we examined last year showed, most tech jobs are being filled by people coming from overseas, and indeed from outside of the EU/EEA.”
“Intel is just one example of the potentially precarious dependence of the Irish economy on Foreign Direct Investment (FDI) particularly in the technological and pharmaceutical sector. Intel is one of the biggest contributors of the large corporations which paid €23 billion of the overall €88.1 billion in taxes collected here in 2023,” he said.
“It is not beyond the bounds of possibility that, whatever boon the huge corporation tax haul currently is from allowing them to base their operations here, the whole thing could collapse pretty quickly. That might be the case if the likes of Intel and others contact globally, and if the threats to that taxation structure follow upon signals from both camps in the US Presidential elections,” he continued.
He said that “the export of corporate earnings distorts the Irish economy” and that “of the overall GDP for the Irish state in 2021 of $504 billion that $121.6 billion was exported in the form of corporate earnings”.
“Net Factor Income, which when subtracted from GDP provides the Gross National Product (GNP) or Gross National Income (GNI) – so in effect, 24% of the wealth created here was exported in 2021,” he explained, adding that tat this increased to 27.6% in 2023.
“While Ireland had the second highest per capita GDP according to September 2023 OECD statistics, we were below the OECD average for net disposable household income. That means GDP is almost totally unrelated to the relative individual prosperity of Irish citizens.”