Intel is planning to cut costs by eliminating thousands of jobs this fall, Bloomberg reported Tuesday, forecasting that the chipmaker’s sales and marketing organization could lose as many as 20% of its staff.
The reported cutbacks come amid a steep decline in revenue, dragged down by plunging demand for PCs. In July, Intel cut its sales forecast for 2022 to $67 billion, down from $79 billion last year. And early warnings from other tech companies suggest the PC market continued to decline through the summer.
Intel declined comment Tuesday on Bloomberg’s report. The news organization said Intel might announce the cutbacks when it reports quarterly financial results Oct. 27, citing unspecified people “with knowledge of the situation.”
Intel has about 114,000 employees across the business, approximately a fifth of them in Oregon. The company is the state’s largest corporate employer, an anchor for the regional economy. Broad layoffs across the company could easily put hundreds of Oregonians out of work.
The prospect of layoffs is a shocking reversal for Intel, which had been laboring under a worker shortage last year amid hearty demand for computer chips. And Intel has begun a building boom, with two new chip factories under construction in Arizona and two more coming in Ohio.
With the PC market now in a post-pandemic slump, Intel has put itself in a difficult position having committed billions of dollars to expand the business even as sales are falling. So layoffs wouldn’t be surprising, especially in business units that don’t produce direct revenue.
Bloomberg reported the ax will fall heaviest in Intel’s sales and marketing group, with that organization losing as many as one in five jobs. Steep cuts to Intel’s manufacturing and research group might be less likely, with new CEO Pat Gelsinger committed to an ambitious – and expensive – plan to rebuild Intel’s manufacturing and technology prowess.
That gamble may yet pay off if Intel can deliver the succession of upgrades to its microprocessors that it has promised. But with sales in decline and the global economy teetering on the edge of recession, Intel may be in for an excruciating stretch even if Gelsinger’s turnaround project succeeds.
Intel’s had two large rounds of layoffs in 2015 and 2016 as the company restructured in preparation for long-term decline in its PC group, eliminating 13,000 jobs altogether. Those layoffs were a wrenching cultural moment for Intel, creating lingering resentment and bitterness as former CEO Brian Krzanich tried to reposition the business.
Intel now faces increasing dissatisfaction with its investors. The company’s stock has lost nearly half its value this year, plunging from around $50 a share at the end of 2021 to $25.04 at Tuesday’s close.
Oregon’s unemployment rate remains near a historic low, at 3.7%. Vacant positions in the state handily outnumber people looking for work, but soaring inflation, federal interest rate hikes and global economic uncertainty could rapidly darken Oregon’s economic picture.
— Mike Rogoway | mrogoway@oregonian.com | 503-294-7699 | twitter: @rogoway |
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