Intel plans major job cuts and savings as profits plummet
Intel has announced plans to make a “meaningful number” of layoffs as part of wider cost-cutting measures.
The chip giant says its expense reduction plan is set to slash costs by $3 billion in 2023, which it predicts will grow to between $8 billion to $10 billion in yearly cost reductions by the end of 2025.
Intel chief executive officer Pat Gelsinger said the announcements were the results of “difficult decisions” but that the company needs “to balance increased investment in areas like leadership in TD, product and capacity in Ohio and Germany with efficiency measures elsewhere”.
What’s driving the layoffs?
Intel’s third-quarter revenue of $15.3 billion was down 20% year over year (YoY), while net income at the company nosedived 85% to $1 billion.
Not all parts of the business were impacted equally, Intel’s driver-assist subsidiary Mobileye performed remarkably well, with revenues jumping up 38% to $450 million.
The company’s data centre and AI division was not so lucky, its revenue dropped 27% to $4.2 billion.
Intel’s client computing group (CCG) and network and edge group also performed poorly, with revenues dropping 17% and 14% respectively.
Intel isn’t the only big player in the tech hardware space to be laying off workers as of late.
Storage giant Seagate has recently announced plans to axe 3,000 jobs as part of cost-cutting measures, around 8% of its international workforce.
Like Seagate, Intel may have been a victim of softening demand for PCs post-pandemic, where it previously derived a large portion of its sales.
PC shipments totalled 68 million units in the third quarter of 2022, a 19.5% decrease from the third quarter of 2021, according to the Gartner’s statistics.
Intel shares have fallen nearly 50% so far in 2022 from their peak in January.