Intel plans thousands of job cuts in response to PC slowdown | Job Binary

Intel Corp. is planning major layoffs, possibly in the thousands, to cut costs and fight the personal computer market, according to people familiar with the situation.

The layoffs will be announced later this month, as the company plans to report third-quarter earnings on Oct. 27 to make the move, said the people, who asked not to be identified because the deliberations are private. . The chip manufacturer had 113,700 employees in July.

Some divisions, including Intel’s sales and marketing group, could see cuts to about 20 percent of their workforce, according to people familiar with the situation.

Intel faces a sharp decline in demand for PC processors, its core business, and has struggled to regain market share lost to rivals such as Advanced Micro Devices Inc. In July, the company warned that 2022 sales would be about $11 trillion lower than last year. it was expected. Analysts predict a drop in revenue of nearly 20 percent in the third quarter. And Intel’s once-enviable margins have shrunk: about 15 percentage points tighter than historical numbers of around 60 percent.

In its second quarter earnings call, Intel acknowledged that it may make changes to its business to improve earnings. “We are also reducing core expenses in calendar year 2022 and will look to take additional actions in the second half of the year,” CEO Pat Gelsinger said at the time.

Intel, based in Santa Clara, California, declined to comment on the layoffs.

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Intel’s last big round of layoffs came in 2016, when it cut about 12,000 jobs, or 11 percent of the total. The company has since made smaller cuts and shuttered several divisions, including its cellular modem and drone units. Like many companies in the technology industry, Intel froze hiring earlier this year as market conditions worsened and fears of a recession grew.

Gelsinger took over at Intel last year and has been working to restore the company’s reputation as a Silicon Valley legend. But even before the computer crashed, it was an uphill battle. Intel lost its long-held technological edge, and its executives admit that the company’s culture of innovation dried up in recent years.

Now a broader downturn is adding to those challenges. Intel’s PC, data center and artificial intelligence teams are grappling with a slowdown in technology spending on revenue and profit.

PC sales fell 15 percent in the third quarter from a year earlier, according to IDC. HP Inc., Dell Technologies Inc. and Lenovo Group Ltd., both in laptops and desktops that use Intel processors, saw sharp declines.

This is a particularly awkward time for Intel to make cuts. The company lobbied heavily for the $52 trillion chip stimulus bill earlier this year, and pledged to expand its manufacturing in the US. Gelsinger is planning a construction boom that includes bringing the world’s largest chipmaking site to Ohio.

At the same time, the company is under intense pressure from investors to protect its earnings. The company’s stock is down more than 50 percent in 2022, with a 20 percent drop in the past month alone.

With China, the US has clouded the future of the chip. The Biden administration announced new export restrictions on Friday, limiting what US technology companies can sell to the Asian nation.

David Zinsner, Intel’s chief financial officer, said after the company’s latest quarterly report that “there are significant opportunities for Intel to improve and deliver maximum output per dollar.” The chipmaker expected to see restructuring charges in the third quarter, he said, indicating that there were cuts.

Some chip makers, such as Nvidia Corp. and Micron Technology Inc. including, have said that they are staying away from layoffs for now. But other technology companies, such as Oracle Corp. and Arm Ltd., are already cutting jobs.

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