Intel had long been expecting a decline in PC sales after a period of heightened demand due to work-and-study-from-home arrangements brought about by the COVID-19 pandemic. In July, it admitted to Nikkei that it was going to raise the prices of its processors and other chips due to “inflationary pressures” later this year. Turns out that may not be the only move Intel is making to weather the declining PC market. According to Bloomberg, Intel is planning to cut thousands of jobs and could make the announcement around the same time it’s releasing its third quarter earnings report on October 27th.
The company slashed its sales and profit forecasts for 2022 back in July, when it said that it expects revenue for the year to be $11 billion less than previously projected. Chief Executive Officer Pat Gelsinger said during its earnings call for the second quarter that the company “will look to take additional actions in the second half of the year” to improve profits. Bloomberg Intelligence analyst Mandeep Singh said the layoffs could reduce the costs Intel incurs to keep the company running by around 10 to 15 percent. Singh also said that those costs could be worth at least $25 to $30 billion.
Mobileye, the the self-driving tech firm that Intel had purchased for $15.3 billion back in 2017, recently filed for an IPO. Intel intends to keep most of what it earns from the IPO for itself and to help finance the chip factories it’s planning to build. But projected earnings from the offering may not be enough to prevent the mass layoffs, which will affect various divisions within the company. Certain groups, such as the sale and marketing department, will reportedly see their numbers reduced by up to 20 percent.
Over the past year, Intel took steps to achieve its goal of expanding its foundry business. It earmarked $20 billion to build a massive chip-making facility in Ohio, which it intends to turn into the biggest “silicon manufacturing location on the planet.” The company also purchased Tower Semiconductor, a chipmaker catering to clients across industries, for $5.4 billion. There seems to be no indication that those expansion plans are changing, and Bloomberg said that Intel intends to pursue the goals it set for itself as a leaner company.
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