Intel has announced a $10 billion cost cut, a suspension of its fourth quarter dividend, and a 15 per cent workforce reduction.

With the company reporting a loss of $1.6 billion in its latest quarter, the reduction in spending aims to resize and refocus its business.

The chipmaker is also likely seeking to regain market share lost in the ramp up of AI and the decline in semiconductor spending in data centres, with rivals AMD, Nvidia, and TSMC making significant strides in these markets.

Following the news, Intel’s stock was down nearly 20 per cent in pre-market trading on Friday.

The layoffs could affect up to 15,000 people, as the company currently employs more than 125,000 people.

The chip giant said that most of the job cuts will be completed by the end of the year.

"Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones,” said chief executive at the firm said Pat Gelsinger. “Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation.”

Intel also warned that its third quarter financial results will be below analyst predictions, with the business anticipating revenue of between $12.5 billion and $13.5 billion, down from expectations of $14.3 billion.

The firm is planning a series of initiatives, including the launch of processor Intel 18A next to regain competitive edge and strengthen its position in the market, with the aim to improve profitability and create shareholder value.

In June, Intel stalled the ongoing expansion of a major factory project in Israel, which included an additional $15 billion investment in a chip plant.

Last year Intel also cut its workforce by about five per cent, following an announcement made in 2022.

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