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

The company will reduce its quarterly payout to investors to 12.5 cents a share for holders payable June 1, the chipmaker said in a statement on Wednesday. Intel's current quarterly dividend is 36.5 cents and was projected to cost more than US$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.”

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. 

Chip companies are reeling over a steep decline in demand for PC processors that has wiped out profits and led to deep cuts across the industry. Intel is eliminating jobs and slowing spending on new plants in an effort to save as much as US$10 billion. It's taking an especially large hit from losing market share to rivals.

Amid the turbulent market for its products Intel is spending heavily under a plan by Chief Executive Officer Pat Gelsinger to restore its leadership of the industry. 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 industry companies didn't pay dividends, reflecting the volatility of their cashflows amid large swings between gluts and shortages in the more than US$500 billion industry. That's changed in recent years and dividends have become important, not least because they demonstrate confidence in the stability of a company's finances. 

Separately the company reiterated forecasts for the current period given in late January. First-quarter revenue will between US$10.5 billion and US$11.5 billion with a loss, minus certain items, of 15 cents a share. 

Intel shares, one of the worst performing on the Philadelphia Stock Exchange Semiconductor Index this year, have lost about one per cent in 2023 up to Tuesday's close.