Intel plans to cut thousands of jobs to finance recovery, Bloomberg News reports

(Reuters) -Intel plans to cut thousands of jobs to finance a recovery and cope with eroding market share, Bloomberg News reported on Tuesday, citing people familiar with the matter.

Shares of the chipmaker, which is set to report quarterly results on Thursday, were up about 1% in extended trading. The stock has slumped 40% so far this year.

Intel (NASDAQ:) declined to comment on the report when contacted by Reuters.

The U.S chipmaker remains a major player in the personal computer and server markets, but has struggled to keep pace with the growing demand for chips used in AI applications.

CEO Pat Gelsinger has initiated a turnaround to regain the company’s competitive edge, focusing on revitalizing its manufacturing capabilities, investing in advanced chip technologies, and expanding into new markets.

In October 2022, Intel announced a cost-reduction plan that included “people actions”, aimed at slashing annual costs by $3 billion in 2023, reducing the chipmaker’s headcount to 124,800 at the end of 2023 from 131,900 a year earlier, according to regulatory filings.

The plan was expected to provide annual cost savings between $8 billion and $10 billion by 2025, the company had said in February last year.

Analysts expect the company’s second-quarter revenue to be about the same as a year earlier, with data center and AI segment set to post a 23% decline, according to LSEG data.

Intel, traditionally known for designing and manufacturing its own chips, has been making a concerted effort to expand into the foundry business, manufacturing chips for other companies.

Investors expect a push to promote chip manufacturing in North America by the Biden administration to diversify supply chains and reduce reliance on Taiwan to boost Intel’s prospects.