Chip giant is to begin a major headcount reduction this month, as Intel contends with falling PC sales, inflation, and supply chain
Intel is preparing to axe thousands of its staff, in a major headcount reduction that will hit sales and marketing teams especially hard.
This is according to Bloomberg, citing people with knowledge of the situation. Intel is due to report its third quarter financials on 27 October, and it reportedly could announce the job losses then.
When Intel posted its second quarter results in July, it revealed the firm had missed its estimates, leading to it slashing its annual profit and revenue forecasts for the second half of 2022.
PC market decline
Intel has 113,700 employees worldwide (as of July) Bloomberg reported, but the redundancies that are expected to begin this month, could see cuts affecting about 20 percent of staff in sales and marketing departments.
Intel has so far declined to comment on the job cuts.
It is no secret that the PC market is currently in decline.
This week analyst house IDC confirmed this again when it reported a 15 percent year on year decline in PC shipments.
This was a confirmation of the continuing decline in PC shipments it had reported on in July.
IDC noted that “cooling demand and uneven supply have contributed to a year-over-year contraction of 15 percent.”
But now as the world emerges from Covid-19 lockdowns and schools and offices reopen, people are spending less on PCs than they did during the two plus years of the pandemic.
Intel is also dealing with soaring inflation around the world, the worsening economic outlook, Covid-19 lockdowns in China, and Russia’s illegal invasion and war against Ukraine – all of which have damaged supply chains globally and dented consumer confidence, reining-in demand.
Meanwhile CEO Pat Gelsinger reportedly outlined his plan to create a foundry business for Intel.
This was first mooted in March 2021, when Gelsinger doubled down on Intel’s inhouse chip manufacturing capabilities, after investors questioned whether the firm should keep chip design and production under one roof.
Some analysts had wanted the firm to outsource its chip manufacturing to third party foundries such as Taiwan Semiconductor Manufacturing Co Ltd (TSMC).
AMD for example has for years outsourced its CPU production to TSMC, the world’s biggest contract chipmaker.
Gelsinger, as part of Intel’s new strategy, dubbed “IDM 2.0”, announced in March 2021 a significant expansion of Intel’s manufacturing plans, and also announced the firm would begin offering foundry services to other firms (i.e. make chips designed by other firms in Intel factories).
Until now, Intel has mostly built chips it has designed itself.
Gelsinger said at the time that Intel planned to become a major provider of foundry capacity in the US and Europe to serve customers globally, and announced the creation of a new unit called Intel Foundry Services.
On Tuesday this week Gelsinger reportedly released a memo to company employees, outlining plans to create an internal foundry model for external customers and the company’s product lines.