Intel said Thursday it would cut 15% of its workforce and will suspend its dividend in the fourth quarter as the chipmaker pursues a turnaround centered around its loss-making manufacturing business.

Shares of the Santa Clara, California-based company fell 10% in extended trading. The stock closed down 7% on Thursday, in tandem with U.S. chip stocks plummeting after a conservative forecast from Arm Holdings on Wednesday.

Intel expects revenue to be between $12.5 billion and $13.5 billion for the quarter, compared with analysts' average estimate of $14.35 billion, according to LSEG data.

A majority of the job cuts will be completed by the end of 2024.

Companies rushing to develop technology such as OpenAI's ChatGPT have prioritized spending on powerful AI chips used in data centers - an area where Intel is far behind market leader Nvidia and AMD.

This has hit demand for traditional data center chips, Intel's mainstay product for that market. While its central processors are used alongside advanced AI processors, they make up a small number of the overall chips.

Intel is also grappling with tough competition in the personal computer market, which is emerging from a years-long slump with the roll-out of on-device AI features and a fresh Windows update cycle.