Intel slashes dividend 66% to lowest payout in 16 years

Intel, the biggest maker of computer processors, slashed its dividend payment to the lowest level in 16 years in an effort to preserve cash and focus on a turnaround plan.

The Santa Clara-based company will reduce its quarterly distribution to investors to 12.5 cents a share, payable June 1, the chipmaker said in a statement Wednesday. Intel's current quarterly dividend is 36.5 cents and was projected to cost more than $6 billion in 2023. The new payment resets Intel's dividend to a level not seen since 2007.

“The decision to decrease the quarterly dividend reflects the board's deliberate approach to capital allocation and is designed to best position the company to create long-term value,” Intel said in the statement. “The improved financial flexibility will support the critical investments needed to execute Intel's transformation during this period of macroeconomic uncertainty.”

Intel shares closed at $25.47, down 59 cents, or 2.26% on Wednesday.

In its earnings report last month, Intel forecast one of the worst quarters in its history as a slowdown in personal-computer sales ravages the semiconductor industry. Intel is eliminating jobs and slashing management pay while also slowing spending on new plants in an effort to save as much as $10 billion by the end of 2025.

Amid the turbulent market, Intel is spending heavily under a plan by Chief Executive Officer Pat Gelsinger to restore its leadership of the industry. The company has taking an especially large hit from losing market share to rivals. Gelsinger is building new products and trying to take on larger competitors in new markets.

Reducing its payments to shareholders undermines Intel's standing in a growing competition among chipmakers to offer higher returns. Historically companies in the industry didn't pay dividends, reflecting the volatility of their cashflows amid large swings between gluts and shortages in the more than $500 billion industry.