| Translate This News In |
|---|
People with knowledge of the matter claim that Intel Corp. is preparing to significantly reduce its workforce, maybe by thousands, in order to reduce costs and deal with the struggling personal computer industry. According to the people, who declined to be named because the discussions are private, the layoffs will be disclosed as early as this month. The firm intends to make the change around the same time as its third-quarter earnings announcement on October 27. In July, the chip manufacturer had 113,700 workers.
According to the people, roughly 20% of the workforce may be affected by cuts in some areas, including Intel’s sales and marketing team.
Intel’s primary business, PC CPUs, is seeing a sharp fall in demand, and the company has battled to reclaim the market share it lost to competitors like Advanced Micro Devices Inc. The business forewarned that 2022 sales would be around $11 billion less than it had anticipated in July. A 15% decline in revenue is what analysts are projecting for the third quarter. Additionally, Intel’s once-viable margins have shrunk: they are now around 15 percentage points smaller than average figures of about 60%.
Intel recognised that it might adjust certain things to increase profits during its conference call for the second quarter. Pat Gelsinger, the company’s chief executive, said at the time, “We are also reducing core spending in calendar year 2022 and will try to take similar actions in the second half of the year.
The Santa Clara, California-based company Intel declined to comment on the layoffs.
In 2016, when it cut 12,000 positions, or 11% of its overall workforce, Intel saw its most significant round of layoffs. Since then, the corporation has closed many divisions, including its drone and cellular modem units, and made lesser cuts. Intel frozen hiring earlier this year when market circumstances deteriorated and concerns about a recession increased, joining a number of other tech corporations in doing so.
According to Bloomberg Intelligence analyst Mandeep Singh in a research note, the most recent reductions are probably intended to lower Intel’s fixed costs, maybe by 10% to 15%. He places the price tag on those expenses between $25 billion and $30 billion.
When Gelsinger assumed leadership of Intel last year, he immediately set about rehabilitating the organization’s status as a Silicon Valley legend. However, it was a difficult battle even before the PC decline. Since the company’s innovation culture has waned in recent years, Intel has lost its long-held technological advantage, according to its own executives.
These difficulties are now being exacerbated by a wider slowdown. A decline in technology spending is affecting revenue and profit for Intel’s PC, data centre, and artificial intelligence units.
