Chip giant Intel (INTC) recently released its second quarter earnings, revealing lower-than-expected results and announcing a $10 billion cost reduction plan. The company also shared its Q3 revenue expectations, which fell short of analysts' predictions.

Intel reported Q2 revenue of $12.8 billion with earnings per share (EPS) of $0.02. This fell below analysts' estimated EPS of $0.10 and revenue of $12.9 billion. In comparison, the company achieved EPS of $0.13 and revenue of $12.9 billion in the same quarter last year.

The chipmaker plans to implement a significant workforce reduction, aiming to cut 15% of its employees. Additionally, Intel will suspend dividend payments as part of its cost reduction strategy. These measures are part of the company's ongoing turnaround effort to regain market share lost to rival AMD.

Furthermore, Intel's Q3 revenue projection of $12.5 billion to $13.5 billion falls short of market expectations, which were pegged at $14.3 billion. This news caused Intel's stock to plummet by over 16%, highlighting investor concerns about the company's future performance.

The PC market, which experienced a decline for eight consecutive quarters, is showing signs of recovery. However, Intel faces increasing competition, particularly from AMD and Qualcomm. AMD continues to pose a threat, with its stock showing a minimal decline of 3.7% year to date, compared to Intel's steep drop of 38%. Meanwhile, Qualcomm's entrance into the PC space with its Snapdragon X Elite PC chip adds further pressure on Intel.

Intel's Data Center and AI segment, which offers CPUs and GPUs for AI applications, brought in $3.05 billion in Q2, slightly below expectations. Intel's GPUs, however, face strong competition from Nvidia, which is widely regarded as having the best AI processing chips.

Despite these challenges, Intel's Client segment, primarily focused on chip sales for enterprise and consumer computers, remains its largest business division. Q2 saw Client revenue of $7.4 billion, slightly below the anticipated $7.5 billion.

Intel is also aiming to compete with Taiwan Semiconductor (TSMC) through its Foundry business, allowing third-party chip designers to utilize its facilities. However, Intel is currently its own biggest client in this venture.

Looking ahead, Intel is preparing to launch its own answer to Qualcomm's Snapdragon chip later this fall, potentially strengthening its position in the PC market. The company is also eyeing opportunities to expand its market share in the chip manufacturing industry, which is currently dominated by TSMC.

Intel's future success will depend on its ability to navigate increasing competition, capitalize on the demand for AI processing, and successfully expand its Foundry business. The company's cost reduction plan and strategic initiatives aim to position Intel for long-term growth and recovery.