“A penny saved is a penny earned” appears to be the new motto for Intel, which has struggled to grow revenue due to an over-reliance on PC sales and instead plans to cut annual costs to $10 billion a year by 2025.

Intel reported a 20% drop in third-quarter revenue to $15.3 billion and a staggering 85% drop in profit to $1 billion for the quarter ended Oct. 1. In the previous quarter, Intel’s revenue was down 22%.

The chipmaker also cut its annual revenue guidance for the second time this year to $63 billion, down from the $65-68 billion it expected at the end of the last quarter, which was lower than initial revenue guidance of $76 billion dollar.

To counter the woefully low profit, Intel said it is aiming for $3 billion in cost reductions in 2023, which it aims to improve to $8 to $10 billion in annual savings by the end of 2025.

“This will help improve margin and EPS and improve share price,” said Pareekh Jain, CEO, EIIRTrend & Pareekh Consulting. “However, their over-reliance on the PC and server segment is their main vulnerability. It had no footprint in the mobile sector. It lags in GPU and AI chips behind Nvidia and in server chips behind AMD.”

The cost cuts could also affect thousands of jobs, affecting about 20 percent of Intel’s workforce, according to Bloomberg report. Intel CEO Pat Gelsinger confirmed on an analyst call Thursday that layoffs are indeed on the horizon, but did not share any details.

Copyright © 2022 IDG Communications, Inc.