Intel plans thousands of job cuts in face of PC slowdown

Intel is planning a major reduction in headcount, likely numbering in the thousands, to cut costs and cope with a sputtering personal computer market, according to sources with knowledge of the situation.

The layoffs will be announced as early as this month, with the company planning to make the move around the same time as its third-quarter earnings report on Oct 27, said the sources, who asked not to be identified because the deliberations are private. The chipmaker had 113,700 employees as at July.

Some divisions, including Intel’s sales and marketing group, could see cuts affecting about 20 per cent of staff, according to the sources.

Intel is facing a steep decline in demand for PC processors, its main business, and has struggled to win back market share lost to rivals like Advanced Micro Devices.

In July, the company warned that 2022 sales would be about US$11 billion (S$15.8 billion) lower than it previously expected. Analysts are predicting a third-quarter revenue drop of nearly 20 per cent. And Intel’s once-enviable margins have shrivelled: They are about 15 percentage points narrower than historical numbers of around 60 per cent.

During its second-quarter earnings call, Intel acknowledged that it could make changes in its business to improve profits.

“We are also lowering core expenses in calendar year 2022 and will look to take additional actions in the second half of the year,” chief executive Pat Gelsinger said at the time.

Intel declined to comment on the layoffs, and whether Singapore would be affected.

Its last big wave of layoffs occurred in 2016, when it trimmed about 12,000 jobs, or 11 per cent of its total.

The company has made smaller cuts since then and shuttered several divisions, including its cellular modem and drone units. Like many companies in the technology industry, Intel also froze hiring earlier this year, when market conditions soured and fears of a recession grew.

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