As Intel announced several thousand jobs being axed and a weaker-than-expected forecast for sales in the current quarter, its shares have suffered their largest decline in more than 40 years.

Shares fell 26 per cent to $21.48 (A$33.12), wiping out about $32 billion (A$49.33 billion) in market value. It marked the stock’s biggest single-day drop since at least 1982.

Investors punished Intel as the chipmaker said on Thursday that sales for the current quarter would be $12.5 billion (A$19.27 billion) to $13.5 billion (A$20.81 billion), less than what analysts had precited would be $14.38 billion (A$22.17 billion) on average.

It also announced plans to cut 15,000 jobs of its workforce of around 110,000 people. “Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” CEO Pat Gelsinger said in a note.

“Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low,” he said. “We need bolder actions to address both — particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.”

The company added that it is suspending dividend payments to shareholders starting in the fourth quarter, and will continue that until “cash flows improve to sustainably higher levels.”

It reported a massive hit to its income, reporting a $1.6 billion (A$2.47 billion) net loss in the second quarter compared to net income of $1.5 billion (A$2.31 billion) in the corresponding period last year.

Intel’s revenue of $12.83 billion (A$19.09 billion), was also down 1 per cent since last year.

The company has much to do with catching up with its competitors who are focusing on AI chip developments.

Next month, Intel will launch its next-gen Intel Core Ultra processors in Berlin ahead of the IFA 2024 event. Code-named Lunar Lake, Intel says the processors’ “breakthrough x86 power efficiency, exceptional core performance, massive leaps in graphics performance and the unmatched AI computing power” will drive this and future generations of Intel products.

It is also reducing its spending on new plants and equipment in 2024 by more than 20 per cent, and is now budgeting between $25 billion (A$38.54 billion) and $27 billion (A$41.63 billion). Next year, expenses will range between $20 billion (A$20.83 billion) and $23 billion (A$35.46 billion).

While Intel begins to increasingly take charge of manufacturing its own chips rather than having others do so for it, there are issues with some of its latest processors. As ChannelNews reported in July, it recently confirmed instability issues with its 13th-gen and 14th-gen desktop CPUs. Thomas Hannaford, Intel’s communications manager, blamed it on an error in the microcode that requests incorrect voltage numbers, leading to instability in the processor.