Right here’s the complete textual content of the memo shared by Intel CEO
Workforce,
We now have moved our All Firm Assembly to as we speak, following our earnings name, as we’re asserting vital actions to cut back our prices. We plan to ship $10 billion in price financial savings in 2025, and this contains lowering our head rely by roughly 15,000 roles, or 15% of our workforce. The vast majority of these actions might be accomplished by the tip of this 12 months.
That is painful information for me to share. I do know it is going to be much more tough so that you can learn. That is an extremely laborious day for Intel as we’re making a few of the most consequential modifications in our firm’s historical past. After we meet in a number of hours, I’ll speak about why we’re doing this and what you’ll be able to count on within the coming weeks. Upfront of that, I wished to preview a few of what’s on my thoughts.
Merely put, we should align our price construction with our new working mannequin and basically change the way in which we function. Our revenues haven’t grown as anticipated – and we’ve but to completely profit from highly effective tendencies, like AI. Our prices are too excessive, our margins are too low. We’d like bolder actions to handle each – significantly given our monetary outcomes and outlook for the second half of 2024, which is harder than beforehand anticipated.
These choices have challenged me to my core, and that is the toughest factor I’ve achieved in my profession. My pledge to you is that we are going to prioritize a tradition of honesty, transparency and respect within the weeks and months to return.
Subsequent week, we’ll announce a companywide enhanced retirement providing for eligible staff and broadly provide an utility program for voluntary departures. I consider that how we implement these modifications is simply as vital because the modifications themselves, and we are going to adhere to Intel values all through this course of.
Why Now?
Since introducing our new working mannequin, we’ve taken a clean-sheet view of the enterprise and assessed ourselves towards benchmarks for high-performing foundries, fabless product corporations and company capabilities. This work made it clear our price construction just isn’t aggressive.
For instance, our annual income in 2020 was about $24 billion larger than it was final 12 months, but our present workforce is definitely 10% bigger now than it was then. There are loads of causes for this, however it’s not a sustainable path ahead.
Past our prices, we have to change the way in which we function – one thing a lot of you shared as a part of our Worker Expertise Survey. There’s an excessive amount of complexity, so we have to each automate and simplify processes. It takes too lengthy for choices to be made, so we have to remove forms. And there’s an excessive amount of inefficiency within the system, so we have to expedite workflows.
Key Priorities
The actions we’re taking will make Intel a leaner, less complicated and extra agile firm. Let me spotlight our areas of focus:
Lowering Operational Prices: We are going to drive companywide operational and price efficiencies, together with the fee financial savings and head rely reductions talked about above.
Simplifying Our Portfolio: We are going to full actions this month to simplify our companies. Every enterprise unit is conducting a portfolio assessment and figuring out underperforming merchandise. We’re additionally integrating key software program belongings into our enterprise items so we speed up our shift to systems-based options. And we are going to slender our incubation deal with fewer, extra impactful tasks.
Eliminating Complexity: We are going to scale back layers, remove overlapping areas of accountability, cease non-essential work, and foster a tradition of larger possession and accountability. For instance, we are going to consolidate Buyer Success into the Gross sales, Advertising and Communications Group to streamline our go-to-market motions.
Lowering Capital and Different Prices: With the completion of our historic five-nodes-in-four-years roadmap clearly in sight, we are going to assessment all energetic tasks and tools so we start to shift our focus towards capital effectivity and extra normalized spending ranges. It will scale back our 2024 capital expenditures by greater than 20%, and we plan to cut back our non-variable price of products bought by roughly $1 billion in 2025.
Suspending Our Dividend: We are going to droop our inventory dividend starting subsequent quarter to prioritize investments within the enterprise and drive extra sustained profitability.
Sustaining Development Investments: Our IDM2.0 technique is unchanged. Having fought laborious to reestablish our innovation engine, we are going to preserve the important thing investments in our course of expertise and core product management.
The Future
I’ve no illusions that the trail in entrance of us might be straightforward. You shouldn’t both. This can be a powerful day for all of us and there might be extra powerful days forward. However as tough as all of that is, we’re making the modifications vital to construct on our progress and usher in a brand new period of development.
After we started this journey, we set our sights excessive, understanding that Intel is a spot the place massive concepts are born and the facility of what’s attainable triumphs over the established order. In spite of everything, our mission is to create world-changing applied sciences that enhance the lives of each individual on the planet. And at our greatest, we’ve exemplified these beliefs greater than any firm on the earth.
To stay as much as this mission, we should proceed to drive our IDM 2.0 technique, which stays the identical: re-establish course of expertise management; spend money on at-scale, globally resilient provide chain by increasing manufacturing capability within the U.S. and EU; turn out to be a world-class, modern foundry for inside and exterior prospects; rebuild product portfolio management; and ship AI In all places.
Over the previous few years, we’ve rebuilt a sustainable innovation engine that’s largely in place and on observe. It’s now time to deal with constructing the sustainable monetary engine wanted to drive our efficiency. We should enhance our execution, adapt to new market realities and function as a extra agile firm. That’s the spirit of the actions we’re taking – understanding that the alternatives we make as we speak, as tough as they’re, will strengthen our capability to serve our prospects and develop our enterprise for years to return.
As we take these subsequent steps in our journey, let’s not overlook that there has by no means been a larger want for what we do. The world will more and more run on silicon – and the world wants a wholesome and vibrant Intel. That’s why the work we’re doing is so consequential. Not solely are we remaking an ideal firm, however we’re additionally creating expertise and manufacturing capabilities that may reshape the world for many years to return. And that is one thing we should always by no means lose sight of as we push ahead in pursuit of our targets.
We’ll speak extra in a number of hours. Please come together with your questions so we are able to have an open and trustworthy dialogue about what comes subsequent.
