Intel Cuts 15,000 Jobs, Blames AI, as Rival Nvidia Faces DOJ Probes

• Intel plans for $10 billion in cost savings and will cut 15% of its 110,00 strong workforce as part of this aim.
• Nvidia’s alleged $700 million acquisition of an Israeli AI startup has sparked an antitrust investigation from U.S. regulators.
• Intel has posted a loss of $1.61 billion in Q2 2024. It posted profits of $1.5 billion in Q2 2023.

It would appear that big tech is going through a bit of a rough patch as Intel’s Q2 2024 earnings fall unexpectedly short of Wall Street predictions, and GPU giant Nvidia faces antitrust probes from the U.S. government.

Intel Q2 2024

In a staff memo following the publication of its disappointing Q2 2024 earnings, Intel CEO Pat Glesinger has told employees that approximately 15,000 of them will be losing their jobs by the end of 2024. Outlining the reasons why, Intel’s chief financial officer (CFO), David Zisney, stated :

“Second-quarter results were impacted by gross margin headwinds from the accelerated ramp of our artificial intelligence PC product, higher than typical charges related to non-core businesses, and the impact from unused capacity.”

Coupled with Intel’s Q2 2024 earnings, things are looking pretty bleak. Intel posted a loss of $1.6 billion, which is down from a profit of $1.5 billion this time last year. Missing its targets by quite a margin of around $100 million, the firm posted net revenues of $12.8 billion, down just 1% year-over-year.

Glesinger notes this poor performance as part of the reason that thousands of people will soon become unemployed, writing:

“For example, our annual revenue in 2020 was about $24 billion higher than it was last year, yet our current workforce is actually 10% larger now than it was then. There are a lot of reasons for this, but it’s not a sustainable path forward.”

Outlining its key priorities moving forward, Intel’s plans include simplifying its portfolio, improving on “companywide operational and cost efficiencies”, and consolidating certain company divisions.

This also involves the firm suspending its stock dividend from Q3 onwards to prioritize its investments and “drive more sustained profitability.” Intel’s stock price has fallen over 27% since the announcement.

Nvidia Anti-Trust Probes

On the other side of AI and big tech, stock market superstar Nvidia is facing headwinds as its position at the top of AI GPU comes under regulatory scrutiny.

The US Department of Justice (DOJ) has reportedly launched two probes into Nvidia. One cites concerns with the tech behemoth’s AI-centric, and potentially anti-competitive acquisitions, whilst the other is to assess if Nvidia abused its market dominance.

More specifically, the first probe was triggered following Nvidia’s reported $700 million acquisition of Israeli GPU specialist, Run:ai.

In short, Run:ai, which already had a partnership with Nvidia, has technologies that ‘virtualize’ GPUs, allowing users to get more done with less chips.

Naturally, with GPUs being the bread and butter of Nvidia’s business, the acquisition comes in a timely fashion, especially as demand for GPUs and AI chips continues to outpace supply.

The second probe, which comes in response to complaints from competitors, will examine if Nvidia pressured cloud providers into purchasing its products. Furthermore, it will look into allegations that Nvidia overcharged customers for networking equipment if they had purchased AI chips from rival firms.

Big Tech Anticompetetive?

Big tech is under scrutiny in general, especially in the wake of the emerging AI sector. In July 2024, the DOJ, and U.S. Federal Trade Commission, the European Commission, and the U.K.’s Competition and Market Authority issued a joint statement on the matter. In it, they pledge:

“[…]to remain vigilant for potential competition issues and expressed their determination to use available powers to safeguard against tactics that would undermine fair competition or lead to unfair or deceptive practices in the AI ecosystem.”

Most recently, other major firms such as Microsoft and Google have both come under antitrust investigations. Microsoft is facing probes from both the U.S. and the European Union (EU) for its many acquisitions and its relationship with certain AI firms.

Meanwhile, Google is being accused by the U.S. government of amassing something akin to an Internet monopoly, which also follows a string of major purchases, and alleged manipulative self-preferencing actions.

Seemingly, big tech may be at bursting point. With billions of venture capital dollars now pouring into AI startups and initiatives, firms are doing everything they can to take advantage of the gold rush and establish market dominance.