Reports indicate that the chipmaker Intel will be cutting thousands of jobs in response to a slowed demand and shifting consumer interests.
According to sources who spoke to Bloomberg News from inside Intel, the California-based chipmaker is planning companywide cuts to thousands of jobs in response to market conditions that have left sales of traditional computers lagging behind increased interest in more portable devices like smartphones and tablets.
Intel, which employs over 100,000 people, is expected to announce the layoffs sometime around when their third quarter earnings report is released on Oct. 27.
According to Bloomberg’s sources, some sectors of Intel will be hit harder by the cuts than others. Marketing and sales, two sectors Intel executives seem to feel have failed to keep pace with changing consumer trends, may see as much as 20% of their workforce cut.
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 2022 sales would be about $11 billion lower than it previously expected. Analysts are predicting a third-quarter revenue drop of roughly 15%. And Intel’s once-enviable margins have shriveled: They’re about 15 percentage points narrower than historical numbers of around 60%.
“We are also lowering core expenses in calendar year 2022 and will look to take additional actions in the second half of the year,” Chief Executive Officer Pat Gelsinger said earlier this year during a previous earnings call.
In 2016, during its last big cut, Intel axed 12,000 jobs from its workforce and strategically withdrew from weak-performing projects like its drone development program.
Gartner, a business management consulting firm and member of the S&P 500, discussed the slowdown in personal computer sales in a recent press release concerning industry changes. According to their research, the 68 million units sold industry-wide this third quarter marks a nearly 20% decrease from the same period in 2021:
While supply chain disruptions have finally eased, high inventory has now become a major issue given weak PC demand in both the consumer and business markets. Back to school sales ended with disappointing results despite massive promotions and price drops, due to a lack of need as many consumers had purchased new PCs in the last two years. On the business side, geopolitical and economic uncertainties led to more selective IT spending, and PCs were not at the top of the priority list.
Intel was founded in 1968 and is the world’s largest semiconductor chip manufacturer. A portmanteau of the words Integrated Electronics, the chipmaker provides components to computer manufacturers like Dell, HP, and Lenovo.