The wave of layoffs could start as early as this month. Analysts are forecasting a further significant decline in sales in the next quarterly figures.
Intel is planning a major job cut that is said to be in the thousands. This is intended to save costs in order to compensate for the expected decline in sales due to the continued weakness of the PC market. Bloomberg reports, citing people familiar with the situation. However, no decisions have been made so far.
The layoffs could begin as early as this month. Intel is expected to make the layoffs official later this month when the chipmaker reports its third-quarter earnings on Oct. 27. Some departments, such as sales and marketing, could see job cuts of 20 percent.
Intel is currently struggling with dwindling demand for PC processors and is struggling to regain market share lost to AMD. Already in July of this year, when Intel had to admit a significant drop in sales and losses in the millions, the forecast for annual sales was lowered by 8 to 11 billion.
Quarterly revenue decline expected
According to Bloomberg, market observers expect Intel to suffer a drop in sales of almost 20 percent in the third quarter that has just ended. Intel itself previously assumed 17 to 22 percent less than in the same period last year, when Intel scraped a record profit thanks to tax tricks.
The last wave of layoffs at the world’s largest chip manufacturer took place in 2016, when Intel cut up to 12,000 jobs in order to transform itself from a classic computer supplier to a mobile and cloud service provider. Since then, the number of jobs has increased again. While there were 107,000 jobs before the job cuts in 2016, Intel currently has over 113,000 employees.
Layoffs due to falling demand
But now the global economy is sliding towards recession due to the Ukraine conflict and rising energy costs. End users and enterprise customers are cutting back their investments, causing global PC shipments to fall by 15 to 18 percent in the third quarter. Only Apple defied the slump in the PC market and was able to come up with positive growth compared to the previous year. Apple no longer relies on Intel processors, but uses its own ARM-based chips.
Some companies such as graphics specialist Nvidia and memory manufacturer Micron still want to avoid layoffs despite the crisis. Other companies such as Oracle or ARM after the failed Nvidia takeover have already cut jobs.
Job cuts despite expansion
Intel’s wave of layoffs comes at an inopportune time, because the chip manufacturer is actually expanding massively in production. The company is demanding billions in government funding from the USA, the EU and Germany. A new semiconductor factory for 20 billion US dollars is to be built in the state of Ohio, and a semiconductor factory for 17 billion euros in Magdeburg .