Intel will cut 15,000 jobs, or 15% of its workforce, by the end of the year. The chip company reported no profits at all for the past three months and announced that it aims to cut $10 billion in costs by 2025.

"We plan to cut costs by $10 billion in 2025, which will include a reduction of approximately 15,000 jobs, or 15% of our workforce," Intel CEO Pat Gelsinger said in a memo to employees.

"This is hard news for me. It will be even harder for you to read. This is an incredibly hard day for Intel because we are about to undergo the most significant change in the history of our company."

Gelsinger said the decision was due to a new operating model that "made it clear that our cost structure was not competitive."

"For example, our annual sales in 2020 were about $24 billion higher than last year, but our current headcount is 10% higher than it was then. There are many reasons for this, but it is not a sustainable path," Gelsinger said.

Intel has been trying to get back on the road to recovery for years. CEO Gelsinger was even part of its proposed recovery plan. But it didn't happen. Intel faces major challenges in transforming itself into the profitable venture it once was when it was literally flooded with money, and it has not been able to overcome many of them.

The foundry business is lagging behind its competitors and faces significant hurdles to catch up with them. Only a handful of the silicon in Intel's client CPUs and GPUs is actually manufactured by Intel today, and the foundry business has posted an operating loss of $2.8 billion over the past three months. Much of Intel's cost is seen as being to keep up with rivals such as TSMC.

Intel's CPUs face stiff competition from ARM as well as AMD, not to mention the ongoing instability problems caused by Intel's proprietary microcode. And the fastest growing computing market, AI, is playing into the hands of another computing company, Nvidia.

Intel's plan for major layoffs will affect 15,000 employees. This is equivalent to almost half of Nvidia's total workforce and a serious majority of AMD's. Intel currently has well over 120,000 employees.

Intel's CEO has indicated several ways to prepare for even tougher times and to take "bolder action." Some of these may affect the products Intel chooses to make in the future.

One of the priorities Gelsinger has laid out is to simplify its portfolio.

It is easy to guess which projects this will be. Intel's graphics division has long been the subject of such rumors, but it is also an important market for Nvidia that is growing by leaps and bounds. In any case, nothing has been confirmed yet, so let's not assume anything just yet.

Other priorities include suspending dividends (payments to investors), reducing capital and spending, eliminating complexity, and further reducing costs. In effect, it appears to be going into full saving mode and putting an end to its grand plan to spend large amounts of cash to get out of a prolonged slump.