Intel Corp. is planning a significant reduction in its workforce in order to reduce costs and address challenges in the personal computer market.
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The layoffs will be announced as early as this month, with the company planning to make the move around the same time as the release of its third-quarter earnings report on Oct. 27. The chipmaker had 113,700 employees in July.
Some departments, including Intel sales and marketing, could see cuts affecting about 20% of staff.
Intel is facing a sharp decline in demand for computer processors, its main business, and has struggled to regain market share lost to rivals such as Advanced Micro Devices Inc.In July, the company warned that 2022 sales would be about $11 billion lower than previously expected. Analysts are predicting a third-quarter revenue drop of about 15%. And Intel’s once-enviable profit margins have shrunk by about 15 percentage points.
Intel has previously said it could make changes to improve earnings. "We are also reducing core costs in calendar year 2022 and will look to take additional measures in the second half of the year," said CEO Pat Gelsinger.
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Intel's last major layoff was in 2016, when it laid off about 12,000 employees, or 11% of its total workforce. The company has made smaller cuts since then and has shuttered several divisions, including its mobile modem and drone. Like many companies in the technology sector, Intel also froze hiring earlier this year as market conditions worsened and recession fears grew.
PC sales fell 15% in the third quarter from a year earlier, according to IDC. HP Inc., Dell Technologies Inc. and Lenovo Group Ltd., which use Intel processors in their laptops and desktops , all suffered sharp declines.
With PC prices stagnating and demand waning, Intel may also need to pursue a dividend cut to offset adverse cash flow. However, Intel's plan to sell shares of self-driving technology company Mobileye in an initial public offering may alleviate those concerns.
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At the same time, the company is facing intense pressure from investors to support its earnings. The company's shares have fallen more than 50% in 2022, with a 20% plunge in the last month alone.
