Intel has announced plans to conduct a “meaningful number” of layoffs as part of broader cost-cutting measures.
The chip giant says its plan to cut costs is set to cut costs by $3 billion in 2023, which it expects to increase to between $8 billion to $10 billion in annual cost cuts by the end of 2025.
Intel CEO Pat Gelsinger said the announcements were the result of “difficult decisions” but the company needed to “balance increased investment in areas such as leadership in TD, products and capacity in Ohio and Germany with efficiency measures elsewhere.”
What drives layoffs?
Intel’s third-quarter revenue of $15.3 billion fell 20% year over year, while the company’s net income fell 85% to $1 billion.
Not all parts of the business were affected equally, Intel’s driver-assistance company Mobileye performed well, with revenue jumping 38% to $450 million.
The company’s data center and AI department weren’t so lucky, as their revenue fell 27% to $4.2 billion.
Intel’s Customer Computing Group (CCG) and Network and Edge Group also underperformed, with revenue down 17% and 14%, respectively.
Intel isn’t the only big player in the hardware tech field to be laying off workers lately.
Storage giant Seagate recently announced plans to Ax 3000 jobs As part of cost-cutting measures, about 8% of the international workforce.
Like Seagate, Intel may be a victim of declining PC demand in the post-pandemic era, as it previously derives a large portion of its sales.
PC shipments totaled 68 million units in the third quarter of 2022, down 19.5% from the third quarter of 2021, according to Gartner statistics.
Intel shares are down nearly 50% so far in 2022 from their January peak.