Bloomberg quoted people familiar with the matter as saying that Intel plans to cut thousands of jobs to cut costs and respond to changes in the personal computer (PC) market sentiment, which may be announced as soon as October 27 when it releases third-quarter earnings.
According to sources, some Intel divisions, such as marketing and operations, might lay off as much as 20% of their jobs. As of the end of July, Intel employed 113,700 people.
Market demand for Intel’s main business processors is falling sharply, and it is struggling to recover from AMD’s (AMD-US) to take away market share. The company warned in July that full-year revenue might be regarding $11 billion less than originally expected. Analysts predict that its third-quarter revenue may plummet by nearly 20%. In addition, Intel’s once-proud gross margin is shrinking, down regarding 15 percentage points from its historical level of regarding 60 percent.
At the second-quarter legal briefing, Intel admitted that it was adjusting its business to improve profitability, with Chief Executive Pat Gelsinger saying at the time: “We are reducing core spending in calendar year 2022 and will take more action in the second half of the year. ”
Intel’s previous wave of major layoffs was in 2016, when it cut regarding 12,000 people or 11% of its total workforce. Like many tech players, Intel announced a staffing freeze earlier this year.
Kissinger has been active in bringing Intel back to glory since he took office last year, but even before the PC boom has slowed down, this is still a tough task, as the company has not only lost its long-term technological advantages, but its own executives also admit that the internal innovation culture has grown increasingly in recent years. diminished.
Today’s slump adds to the test for Intel, with businesses ranging from PCs and data centers to artificial intelligence (AI) hit by a slowdown in technology spending.
According to the statistics of research firm IDC, PC sales in the third quarter decreased by 15% year-on-year, and HP (HPQ-US), Dell (DELL-US), Lenovo (00992-CN) and other customers using Intel processors, sales declined significantly.
The timing of the rumored layoffs is embarrassing for Intel, which has aggressively lobbied for U.S. chip bills. The company has lobbied aggressively for $52 billion in federal subsidies and promised to expand its U.S. manufacturing footprint. It is planning to build large-scale construction and wafer factories in Ohio and other places.
But on the other hand, Intel is also facing urgent pressure from investors. Intel (INTC-US) shares have plunged more than 50% this year and 20% in the last month alone.
The shadow of the U.S.-China tech standoff is overshadowing the entire semiconductor industry, making the outlook even more bleak. Although Huida (NVDA-US), Micron (MU-US) and other semiconductor companies, which still do not intend to resort to layoffs, but include Oracle (ORCL-US), ARM, etc., have already started layoffs.
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