Intel plans major cuts in jobs and billions in savings as profit slumps. The chip-making company is pointing the blame on macroeconomic headwinds for its woes.
Intel Plans Major Cuts in Jobs as Profit Slumps
Chip-making company Intel has now announced its plans to make a ‘meaningful number’ of layoffs as part of wider cost-cutting measures by the company.
Intel says that its expense reduction plan is all set to cut costs by $3 billion in 2023, which it already predicts will grow to between $8 billion to $10 billion in yearly cost reductions by the end of 2025.
Pat Gelsinger, Intel’s chief executive said that the announcements were the results of “difficult decisions” but however the company needs “to balance increased investment in areas like leadership in TD, product and capacity in Ohio and Germany with efficiency measures elsewhere”.
The Driving Force of the Layoffs
The third quarter revenue of Intel’s $15.3 billion was down 20% year over year (YoY), while net income on the other hand at the company nosedived 85% to $1 billion.
One thing is that not all parts of the business were equally impacted, Intel’s driver-assist subsidiary Mobileye did excellently well with revenues on that end spiking up 38% to $450 million.
The data center and AI division of the company was not that lucky as its revenue dropped 27% to $4.2 billion.
Intel’s client computing group (CCG) and network and edge group also did poorly, with its revenues dropping 17% and 14% respectively.
Intel Is Not the Only Big Tech Company in the Hardware Space to Be Laying Off Staff
Intel however is not the only big tech company in the hardware space to be laying off staff at the moment. Seagate, a storage company just recently announced its plans to axe 3,000 jobs as part of its cost-cutting measures which is around 8% of its international workforce.
And just like Seagate, Intel may just have been a victim of weakened demand for PCs post-pandemic, where it had previously derived a very big portion of its sales.
Shipments of PCs Totaled 68 Million Units in the Third Quarter Of 2022
Shipments of PCs totaled 68 million units in the third quarter of 2022 which is a 19.5% decrease from the third quarter of 2021 as per Gartner’s statistics.
So far in 2022, the shares of Intel have dramatically fallen nearly 50% from their peak back in January.