In a move to improve profits as the demand for PC processors starts to decline, Intel is planning to cut thousands of workers from its employment. Certain divisions, which include the sales and marketing groups, could see cuts up to 20%.
Intel is Cutting Thousands of Members to Cut Costs and Cope with the Decline in the PC Market
According to the story by Bloomberg, the decision of Intel to cut thousands of members is in order for it to cut costs and cope with the PC market slowing down. The information reportedly came from people that had knowledge of the situation.
The announcement regarding Intel's layoffs would happen as early as this month. The company's plan is for the moves to start happening around the same time as its upcoming Q3 earnings report, which is expected to happen on October 27.
The Company has 113,700 Employees and It Could Downsize 20% of Different Divisions
As of July, the chipmaker had a workforce of 113,700, as also noted in Business Insider, and certain divisions within the company, like its sales and marketing groups, could see significant reductions. Employee size reductions for those divisions, and maybe more, could see up to a 20% downsizing.
The article by Bloomberg then notes that Intel is facing a steep decline when it comes to PC processor demand, which is the main business of the company. It has struggled to regain the market share it lost from one of its biggest competitors, Advanced Micro Devices Inc., otherwise known as AMD.
Company Already Anticipated Its Sales to Drop by About $11 Billion
The company gave a warning in July that its sales for 2022 would drop by about $11 billion compared to previous expectations. So far, analysts are making a prediction that Q3 revenue could drop by a significant 15%.
The once massive margins of the company have now shriveled since they are just 15% narrower compared to the historical numbers of an alarming 60%. During the company's Q2 earnings, the company acknowledged that changes had to be made in order for them to improve profits.
Last Major Layoffs for Intel Happened in 2016 Where 12,000 Jobs were Let Go
Pat Gelsinger, the CEO of the company, said that they are going to lower core expenses and look for additional actions within the year. When Bloomberg asked Intel, based in Santa Clara, California, about the layoffs, they declined to give a comment.
The last major layoffs that Intel had to go through was in 2016, when it let go of 12,000 jobs or 11% of the company in total, as detailed in an article by The New York Times. The last cutbacks are going to be done in order to reduce the fixed costs of the company.
Analyst Mandeep Singh said that the costs could be reduced by about 10% to 15%, which puts it at an estimate of at least $25 billion up to $30 billion.
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Written by Urian B.
