Intel will slash its employee numbers by the thousands, says a Bloomberg report. The move is intended to cut costs in the face of a slowing global PC market.
The company could cut approximately 20% of its sales and marketing teams, said the report, citing “people with knowledge of the situation,” who asked not to be identified. The chipmaker had 113,700 employees as of July.
The major job cuts haven’t been made public, but an announcement is expected as early as this month, likely around Intel’s third-quarter earnings report on October 27. Intel last had major layoffs in 2016, when about 12,000 people were let go. As of July, Intel employed approximately 113,700 folks.
Lenovo, HP, Dell, and other PC makers have all seen a significant drop in PC sales due to global inflation and geopolitical instability. The steep decline in demand for PC processors has negatively affected Intel’s revenue.
Intel has also taken quite a hit by Apple’s 2020 decision to move away from Intel processors in its Mac computers and adopt its own custom Apple Silicon instead.
Earlier this year, Intel said 2022 sales would be around $11 billion lower than it had expected. Analysts are now predicting a third-quarter revenue drop of about 15%. Intel’s margins are also on the decline.
The chipmaker has also struggled to win back market share from rivals like AMD.
Worldwide PC shipments plunged during the third quarter, declining by 18%, according to Canalys. IDC announced similar findings, saying sales fell over 15%, while Gartner reported PC shipments were down 19.6% during the same quarter.
Intel’s profit margins have dropped greatly, falling 15 percentage points from its historical numbers of around 60%.
Intel is betting on turning things around by selling advanced AI-powered chips to the data-center market. The company is working with TSMC to build chips using the chip fabricator’s 5nm process. The Santa Clara, California chipmaker is also planning to sell shares of its Mobileye self-driving technology business in an initial public offering, which has been valued at $30 billion.
During its second-quarter earnings call, Intel acknowledged that it could make changes 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 Officer Pat Gelsinger said.
Intel has declined to comment on the layoffs.