Intel allegedly plans imminent lay off of thousands of employees to fuel turnaround
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Credit: Intel
According to “people familiar with the company’s plans,” Intel may soon eliminate thousands of jobs to decrease costs and fund an ambitious attempt to rebound from recent earnings slumps and market share losses. The reports, from anonymous sources familiar with the company’s plans, tell Bloomberg the announcement could come as early as this week.
According to Bloomberg, Intel CEO Pat Gelsinger has been “spending heavily on research and development projects.” The extra spending is hoped to enhance Intel’s technology and regain its prominence in the semiconductor industry. The company has lost ground to rivals, including AMD and Nvidia.
Intel allegedly needs to eliminate thousands of existing jobs to continue funding its R&D and manufacturing projects. Intel employs approximately 110,000 people at present, not counting workers at spun-out units. The last time Intel had a large workforce reduction was announced in October 2022 and completed in 2023. During that round of mass layoffs, Intel laid off about 5% of its employees.
To pull off such a rebound, Intel needs to improve its technology in key areas. Not only has AMD caught up and begun taking market share in CPUs, but chipmakers led by Nvidia currently dominate the development of semiconductors for artificial intelligence-related tasks.
Sources say Gelsinger believes Intel can improve its technology and regain its dominance. He’s been developing a plan to build factories that will manufacture semiconductors for other chipmakers. Recently, Intel hired former Micron executive Naga Chandrasekaran as chief global operations officer. Chandrasekaran will lead Intel Foundry’s global manufacturing operations and strategic planning.
Intel is scheduled to report second-quarter earnings on Thursday, August. 1. Analysts project Intel to report flat revenue for the second quarter compared to the previous year. Wall Street estimates Intel’s sales will increase modestly during the second half of 2024 and increase 3% to $55.7 billion for 2024. That will mark Intel’s first annual revenue increase since 2021.
Whether Intel will announce the layoffs before the earnings call on Tuesday remains to be seen. However, Bloomberg noted that Intel’s shares rose by roughly a percentage point in late trading after the news first broke. If analysts and investors see Intel’s layoffs as good for the company’s future, it could bolster the company’s trading even if the earnings call reports flat revenue for the quarter year-over-year.
Tom’s Hardware contacted Intel for comment on the layoff reports. The company declined to comment.
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