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.
Photo: Reuters
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.
AI SPLURGE: The four major US tech companies have lost more than US$950 billion in value since releasing earnings and outlooks, while equipment makers were gaining Four of the biggest US technology companies together have forecast capital expenditures that would reach about US$650 billion this year — a flood of cash earmarked for new data centers and all the gear within them. The spending planned by Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp, all in pursuit of dominance in the still-nascent market for artificial intelligence (AI) tools, is a boom without a parallel this century. Each of the companies’ estimates for this year is expected either near or surpass their budgets for the past three years combined. They would set a high-watermark for capital spending
China’s top chipmaker has warned that breakaway spending on artificial intelligence (AI) chips is bringing forward years of future demand, raising the risk that some data centers could sit idle. “Companies would love to build 10 years’ worth of data center capacity within one or two years,” Semiconductor Manufacturing International Corp (SMIC, 中芯) cochief executive officer Zhao Haijun (趙海軍) said yesterday on a call with analysts. “As for what exactly these data centers will do, that hasn’t been fully thought through.” Moody’s Ratings projects that AI-related infrastructure investment would exceed US$3 trillion over the next five years, as developers pour eye-watering sums
Bank of America Corp nearly doubled its forecast for the nation’s economic growth this year, adding to a slew of upgrades even after a rip-roaring last year propelled by demand for artificial intelligence (AI). The firm lifted its projection to 8 percent from 4.5 percent on “relentless global demand” for the hardware that Taiwanese companies make, according to a note dated yesterday by analysts including Xiaoqing Pi (皮曉青). Taiwan’s GDP expanded 8.63 percent last year, the fastest pace since 2010. The increase “reflects our sustained optimism over Taiwan’s technology driven expansion and is reinforced by several recent developments,” including a more stable currency,
COLLABORATION: Taiwan and the US could jointly find solutions to weaknesses in supply chain resilience for critical materials, focusing on mining and initial refinement Taiwan is likely to purchase rare earths from the US in the future, and is also in talks with Australia and Canada to strengthen global rare earth supply chain security, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Taiwan and the US last month concluded the sixth Economic Prosperity Partnership Dialogue, during which both sides signed a joint statement endorsing the principles of the Pax Silica Declaration, pledging to deepen cooperation in areas including critical minerals. At the time, Kung said the two sides would establish working groups to advance cooperation in areas including artificial intelligence, digital infrastructure, critical materials and
RSS