Intel To Layoff 20% Of Its Employees Amid Weak PC Demand

New Delhi(Coinchapter.com): Intel Corp is planning to reduce their employee numbers by thousands. Because of the poor health of the personal-computer market, Intel plans to cut costs and make up for it by decreasing the number of employees.

Intel Corp. is reportedly planning to announce layoffs as early as this month, with the company set to take action around the same time as its third-quarter earnings report on Oct. 27th. This comes from unnamed sources who asked not to be identified because the talks are private. As of July  Intel has 113,700 employees.

Intel Might Layoff 20% of its Staff, Including in Divisions like Intel’s Sales and Marketing group

Intel is facing a steep decline in demand for its main product and has lost a significant amount of market share to rivals like Advanced Micro Devices. In July, the company warned that 2022 sales would be about $11 billion lower than previously expected. Analysts predict about a 15% revenue drop for the third quarter. Intel’s margins are shrinking by around 15% from the historical numbers of around 60%.

During its second-quarter earnings call, Intel revealed its plan to lower expenses in order to improve profitability. “We are also lowering core expenses in calendar year 2022 and will look to take additional actions in the second half of the year,” CEO Pat Gelsinger said on the call.

Intel, which is based in Santa Clara, California, declined to comment on the layoffs.
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In early 2016, Intel made large waves with a round of layoffs that affected about 12,000 employees, or 11% of its workforce. The cut was the company’s largest in recent years and came amid growing threats of recession. Like many companies, Intel also froze hiring earlier this year, when market conditions soured and fears of a recession grew.

The latest cuts could be meant to reduce Intel’s fixed costs by about 10% to 15%, according to a research note from Bloomberg Intelligence analyst Mandeep Singh. He estimates those costs might be at least $25 billion to $30 billion.

Last year, Gelsinger took over as the CEO of Intel and has been working to restore the company’s reputation as a Silicon Valley legend. But even before all the PC slowdowns, it was an uphill struggle, as they lost their technological edge and the innovation culture began to wane in recent years.

Intel is battling not just one, but several challenges. For starters, their PC, data center, and artificial intelligence groups are battling a slowing economy that weighs heavily on revenue and profit.

Intel PC Sales Plummeted

PC sales plummeted 15% in the third quarter compared to a year ago, according to IDC. Companies which use Intel processors, including HP Inc., Dell Technologies Inc., and Lenovo Group Ltd., all suffered significant drops in sales.
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With PC prices continuing to stagnate and demand weakening, Intel may have to pursue a dividend cut to offset cash-flow headwinds, Singh said. But Intel’s plans to sell shares of its Mobileye self-driving technology business in an Initial Public Offering. Doing so would help alleviate those concerns.

Recently, Intel announced they would be cuttingback on expenditures. This is particularly awkward because they had lobbied heavily for the $52 billion chip-stimulus bill this year, vowing to expand their manufacturing operations in the US. Gelsinger has also been planning a building boom, which includes bringing the world’s largest chipmaking hub to Ohio.

At the same time, the company has been under pressure from investors to increase their profits. The company shares have fallen 50% in 2022, with a 20% fall in the last month.

Intel Stock Down 20% This Month

Shares of the company slipped 0.6% to $25.04 Tuesday on the New York Stock Exchange.

US tensions with China have led many to worry about the chip industry’s future. On Friday, Joe Biden announced new export curbs on US technology companies that sell to China. This news sent shares of chipmakers tumbling anew – with Intel falling 5.4%.

Intel is trying to regain their foothold in the industry by releasing new PC processors and graphics semiconductors. A key part of their strategy has been to sell more chips to the data-center market, where competitors AMD and Nvidia Corp have made inroads. On Tuesday, Google unveiled a new Intel-powered technology for its server farms, which will help them speed up AI tasks.

Intel Hopes to Implement its Goals as a Leaner Company Going Forward

Intel’s Chief Financial Officer David Zinsner said that the company has “large opportunities to improve and deliver maximum output per dollar.” The chip maker expects to see restructuring charges in the third quarter, signaling that layoffs are imminent.

Some of the world’s leading chipmakers, such as Micron and Nvidia, have said they’re steering clear of layoffs for now. But other companies in the tech industry, like Oracle and Arm, are already doing so.

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