Intel is planning substantial job cuts, likely numbering in the thousands, according to a report from Bloomberg News. The reduction in headcount is a response to declining demand for the company’s consumer chips — part of a wider downturn in the PC market. This downturns comes even as Intel is set to receive billions in funding from the CHIPS Act; a package of US government spending intended to boost domestic chip manufacturing.
The layoffs will hit Intel’s sales and marketing teams particularly hard, says Bloomberg, affecting around 20 percent of team members. The cuts will reportedly be announced “as early as this month,” around the same time as Intel’s third-quarter earnings report on October 27th. The company currently has 113,700 employees.
After two years of booming sales during the pandemic, the PC market is now struggling. Recent analysis from Gartner found that worldwide shipments totaled 68 million units in the third quarter of 2022 — a 19.5 percent decrease compared to 2021. Gartner says this is the steepest market decline its recorded since it began tracking the market in the mid-1990s.
“This quarter’s results could mark a historic slowdown for the PC market.”
“This quarter’s results could mark a historic slowdown for the PC market,” said Gartner director analyst Mikako Kitagawa in a press statement. “Back to school sales ended with disappointing results despite massive promotions and price drops, due to a lack of need as many consumers had purchased new PCs in the last two years. On the business side, geopolitical and economic uncertainties led to more selective IT spending, and PCs were not at the top of the priority list.”
Intel raised these difficulties in its second-quarter earnings reports in July. The company said then its consumer chip sales had shrunk by 25 percent while overall revenue declined 22 percent. The company actually lost half a billion dollars — a 109 percent reduction in profit compared to the $5.1 billion it made in Q2 2021. During the same earnings report, Intel CEO Pat Gelsinger noted that the company would be “lowering core expenses in calendar year 2022 and will look to take additional actions in the second half of the year.”
Those “additional actions” now look like they could be coming up soon.
Update, Wednesday 12 October, 08:53AM ET: Updated lede to mention CHIPS Act.