Intel Corp is planning a major reduction in headcount, likely numbering in the thousands, to cut costs and cope with a sputtering PC market, people with knowledge of the situation said.
The layoffs are to be announced as early as this month, with the company planning to make the move around the same time as its third-quarter earnings report on Oct. 27, said the people, who asked not to be identified because the deliberations are private. The chipmaker had 113,700 employees as of July.
Some divisions, including Intel’s sales and marketing group, could see cuts affecting about 20 percent of staff, the people said.
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Intel is facing a steep decline in demand for PC processors, its main business, and has struggled to win back market share lost to rivals like Advanced Micro Devices Inc.
In July, the company warned that this year’s sales would be about US$11 billion lower than it previously expected. Analysts are predicting a third-quarter revenue drop of about 15 percent.
Moreover, Intel’s once-enviable margins have shriveled: They are about 15 percentage points narrower than historical numbers of about 60 percent.
During its second-quarter earnings call, Intel acknowledged that it could make changes to improve profits.
“We are also lowering core expenses in calendar year 2022 and will look to take additional actions in the second half of the year,” Intel chief executive officer Pat Gelsinger said at the time.
Intel chief financial officer David Zinsner said after the company’s latest quarterly report that “there are large opportunities for Intel to improve and deliver maximum output per dollar.”
The chipmaker expected to see restructuring charges in the third quarter, he said, signaling that cuts were looming.
Intel, based in Santa Clara, California, declined to comment on the layoffs.
Intel’s last big wave of layoffs occurred in 2016, when it trimmed about 12,000 jobs, or 11 percent of its total. The company has made smaller cuts since then and shuttered several divisions, including its cellular modem and drone units. Like many companies in the technology industry, Intel also froze hiring earlier this year, when market conditions soured and fears of a recession grew.
Intel’s PC, data center and artificial intelligence groups are contending with a tech spending downturn, weighing on revenue and profit.
PC sales tumbled 15 percent in the third quarter from a year earlier, International Data Corp said.
HP Inc, Dell Technologies Inc and Lenovo Group Ltd (聯想), which use Intel’s processors in their laptops and desktop PCs, all suffered steep declines.
It is a particularly awkward moment for Intel to be making cutbacks. The company lobbied heavily for a US$52 billion chip stimulus bill this year, vowing to expand its manufacturing in the US.
Gelsinger is planning a building boom that includes bringing the world’s biggest chipmaking hub to Ohio.
At the same time, the company is under intense pressure from investors to shore up its profits.
The company’s shares have fallen more than 50 percent this year, with a 20 percent plunge occurring in the past month alone.
The shares on Tuesday slipped 0.6 percent to US$25.04 in New York.
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