News broke late last night that Intel is reportedly preparing to lay off potentially thousands of workers in what would be the biggest round of job cuts at the chipmaker since 2016. report comes from Bloomberg, citing people familiar with the situation, but Intel has not yet publicly commented on its plans. Here’s what you need to know.
- What is going on? late Tuesday, Bloomberg released a report that Intel was preparing “a major workforce reduction,” which could see “thousands” of jobs disappear. The news sent shivers through a tech industry that has been plagued by layoffs in recent months; Understandably, the report is a major concern for Intel employees. If the report is correct, the job losses will likely be the biggest since the chipmaker laid off about 12,000 workers in 2016 — and about 12% of its workforce.
- How many jobs could be lost at Intel this time? If the report is correct, Bloomberg says job losses will likely be “in the thousands.” In July 2022, Intel had 113,700 employees. If the company matched the job losses in 2016, 12% of its current workforce would equal nearly 14,000 employees. However, there is no suggestion yet that job losses could be the same.
- Are certain jobs more likely to disappear than others? That is unknown. But Bloomberg reports that certain divisions at Intel, such as the sales and marketing group, could see about 20% of the workforce leave.
- Why is Intel likely to cut jobs? In short, the profit is not great. Most recently, in July, Intel warned that earnings for the current fiscal year could be $11 billion lower than the company had originally anticipated. The company’s margins have also shrunk.
- Why are Intel’s profits falling? There is not one factor, but rather a storm of bad externalities. One element is that PC sales are falling. Since Intel makes most of the chips in PCs, that’s bad news for the company. IDC reported that PC sales fell 15% year-over-year in the last third quarter. It also doesn’t help that Apple, previously a major Intel customer, is now making its own chips for its Macs. But Intel also sees significant competition from other PC chip makers such as Nvidia and AMD. And recently, the technology Intel can sell to China may be hampered by new export restrictions announced by the White House last week.
- What has Intel said about the reported layoffs? Contacted by londonbusinessblog.com, an Intel spokesperson declined to comment. Intel has not announced any job cuts yet. Earlier this year, however, Intel CEO Pat Gelsinger said, “We are also reducing core costs in calendar year 2022 and will take additional actions in the second half of the year.” Job cuts may be one of those “extra actions”.
- How could the layoffs affect Intel investors? Bloomberg notes that Intel may also lower its stock dividend to bolster its cash flow; however, such a move is not yet a conclusion.
- How did the layoff report affect Intel stock? The news of expected layoffs hasn’t affected the stock much. However, at the time of writing, INTC stock is up 1% in pre-market trading, suggesting investors see layoffs as a way to boost the company’s profits.
This post has been updated with Intel’s response.