Intel’s current business headwinds are outpacing its near-term growth projections, as the company recently pushed for a $52 billion bill to boost the chip business this year.
In what has proven to be a historically low downtime for most companies, the pangs of job cuts may soon be felt by some staff members at U.S. multinational technology conglomerate Intel. As Bloomberg reports, citing sources close to the matter, the company’s planned layoffs could number in the thousands and are expected to be announced as early as Oct. 27, when the company will announce its third-quarter results.
The sources noted that the company’s proposed job cuts will impact some key departments, including sales and marketing. Job cuts in these departments may be as high as 20 percent of the total number of employees.
Like most companies, Intel is facing significant headwinds in its business growth, including the high rate of slow growth in its PC processor unit, its largest business segment to date. The company’s challenges are broad and include general supply chain tension that has affected demands from some of the company’s major customers, including Dell Technologies, Lenovo and HP Inc.
Intel’s slow growth in PC processors is also affected by the influence of its fiercest competitors such as Advanced Micro Devices. Overall, Intel’s business is poised to take a hit in terms of sales, which are expected to plunge $11 billion lower than expected. Notably, expected third-quarter sales are expected to be about 20% lower than expected.
These downward trends are causing the company to shed some of its employees. The company had 113,700 employees at the end of July, making it one of the largest employers of labor in the United States.
Understanding the potential job cuts at Intel
The first priority of any company today is to be able to survive the current economic difficulties in which production costs are rising and are inversely proportional to profits.
The headwinds of Intel’s current business are outpacing its short-term growth projections. The company recently pushed for a $52 billion chip-boosting bill this year. The company also plans to build the world’s largest chip manufacturing plant in Ohio in the near term, a move that doesn’t quite fit with the company’s likely reduction in staff.
However, the company has already indicated that it plans to cut costs to position the company on a more growth-oriented path in an effort to shore up earnings.
“We are also reducing base spending in calendar year 2022 and will look to take additional steps in the second half of the year” said CEO Pat Gelsinger during the company’s second quarter earnings conference call.
Closing some divisions, including its drone and mobile modem units, and cutting back on employee travel are also among its recent moves.