Intel plans to cut costs by shedding thousands of jobs this fall, Bloomberg reported on Tuesday, predicting the chipmaker’s sales and marketing organization could lose up to 20% of its employees.
The reported cuts come amid a sharp drop in sales dragged down by falling demand for PCs. In July, Intel lowered its 2022 revenue guidance to $67 billion from $79 billion a year earlier. And early warnings from other tech companies suggest the PC market has continued to decline throughout the summer.
Intel on Tuesday declined to comment on Bloomberg’s report. The news organization said Intel could announce the cuts when it reports quarterly financial results on Oct. 27, citing unspecified people “with knowledge of the situation.”
Intel employs about 114,000 people across the company, about a fifth of them in Oregon. The company is the country’s largest corporate employer and an anchor for the regional economy. Large-scale layoffs across the company could easily put hundreds of Oregonians out of work.
The prospect of layoffs is a shocking turnaround for Intel, which has suffered from a labor shortage over the past year amid buoyant demand for computer chips. And Intel has started a building boom, with two new chip fabs under construction in Arizona and two more in Ohio.
With the PC market now in a post-pandemic slump, Intel has put itself in a difficult position, having invested billions of dollars to grow the business even as sales slump. So layoffs wouldn’t be surprising, especially in businesses that don’t generate direct revenue.
Bloomberg reported that the ax will fall hardest on Intel’s sales and marketing group, as that organization will lose up to one in five jobs. Steep cuts in Intel’s manufacturing and research divisions may be less likely as new CEO Pat Gelsinger has committed to an ambitious — and expensive — plan to rebuild Intel’s manufacturing and technology capabilities.
That risk could yet pay off if Intel can deliver the promised suite of upgrades to its microprocessors. But with declining sales and the global economy teetering on the brink of recession, Intel could face an agonizing stretch even if Gelsinger’s turnaround project succeeds.
Intel had two major rounds of layoffs in 2015 and 2016 as the company restructured and shed a total of 13,000 jobs in preparation for the long-term demise of its PC group. Those layoffs were a jarring cultural moment for Intel, one that evoked lingering resentment and resentment as former CEO Brian Krzanich attempted to reposition the company.
Intel now faces growing dissatisfaction with its investors. The company’s stock has lost nearly half its value this year, falling from around $50 a share at the end of 2021 to $25.04 at Tuesday’s close.
Oregon’s unemployment rate remains at an all-time low of 3.7%. Vacancies in the state far outnumber job seekers, but rising inflation, federal interest rate hikes and global economic uncertainty could quickly cloud Oregon’s economic picture.
– Mike Rogoway | [email protected] | 503-294-7699 | chirp: @rogow |
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