Chip giant Intel is reportedly planning to scrap thousands of jobs, likely in an attempt to cut fixed costs and deal with a slowdown in the computer market, Bloomberg reports.
The Intel layoffs will be announced as early as this month, as the company is likely planning to make job cuts around the time of its third-quarter earnings report on October 27, sources told Bloomberg.
US President Joe Biden speaks during a ceremony at the groundbreaking of the new Intel semiconductor manufacturing facility near New Albany, Ohio, US, on Friday, Sept. 9, 2022. Last month President Biden signed into law a broad competition bill that includes about $52 billion to boost domestic semiconductor research and development, calling it a “once-in-a-generation investment in America itself.” Photographer: Gaelen Morse/Bloomberg
Additionally, Intel’s sales and marketing group could see cuts impacting about 20 percent of employees. Bloomberg Intelligence analyst Mandeep Singh estimates that Intel’s fixed costs range from at least $25 billion to $30 billion.
In June, Intel delayed the groundbreaking ceremony for its new Ohio plant referred to by the company’s CEO as the start of a “Silicon Heartland” due to worries over a proposed law designed to support U.S. semiconductor production. This came as the company lobbied heavily for a $52 billion chip-stimulus bill. The CHIPS act was passed in late July.
The following month, Intel warned that sales this year would be roughly $11 billion lower than previously expected, as the company deals with a steep decline in demand for PC processors.
Meanwhile, Intel’s margins have withered, as they are about 15 percentage points narrower than historical numbers of around 60 percent.
“We are also lowering core expenses in calendar year 2022 and will look to take additional actions in the second half of the year,” Intel CEO Pat Gelsinger said during the company’s second-quarter earnings call.
Earlier this year, Intel joined many other companies in the tech industry by implementing a hiring freeze amid less favorable market conditions and fears of recession.
Moreover, Intel’s shares have fallen more than 50 percent in 2022, with a 20 percent plunge occurring in the last month alone, Bloomberg reports. On Wednesday morning, the company’s shares also slipped about 1 percent to $24.80 in New York.
You can follow Alana Mastrangelo on Facebook and Twitter at @ARmastrangelo, and on Instagram.
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