Intel has confirmed plans for layoffs in the fourth quarter of 2022 and will cut the company’s overall annual costs by $8 billion to $10 billion by the end of 2025. ‘Intel were not disclosed.
Intel CEO Pat Gelsinger provided clues about the job cuts to Reuters and Bloomberg. Yet most of the cost reductions will apparently be in infrastructure such as factories, the interviews revealed.
The statements surfaced amid the struggling chip giant’s third quarter 2022 results. Among the weak points: third-quarter GAAP revenue was $15.3 billion, down 20% from the same quarter last year.
In early October, reports circulated that Intel’s job cuts would impact thousands of employees and about 20% of staff in some divisions, Bloomberg reported at the time.
Meanwhile, PC shipments fell 19.5% in Q3 2022, Gartner found. The figure represents the largest drop in the PC market since the mid-1990s. The current downturn in the PC market comes after millions of consumers and businesses purchased new PCs for remote work during the coronavirus pandemic. coronavirus. Additionally, enterprises have embraced “more selective IT spending” during the current geopolitical and economic uncertainties, Gartner said.
Among market casualties: Intel rival AMD said revenue would be around $5.6 billion for the third quarter of 2022, down $1.1 billion from previous financial forecasts from AMD, the company said on October 6, 2022.
Related: See all the tech industry layoffs for 2022 listed here.
Intel business challenges
Intel’s business problems began long before the current PC market implosion. Indeed, Intel hired former VMware CEO Pat Gelsinger in 2021 to shake up the plummeting hardware business. An Intel reorganization arrived in June 2021. Additionally, M&A expert Matt Poirier arrived in May 2022. But so far, Gelsinger’s business moves have yet to pay major dividends to the investors.
Much of Intel’s turnaround effort is driven by the IDM 2.0 strategy, which calls on Intel to:
- Continue to build most of its technologies in Intel factors;
- expand its use of external foundries to manufacture certain Intel products; and
- Intel Foundry Services will respond to “the explosion in global chip demand”.
Additionally, Intel plans to launch an IPO for its Mobileye Global business unit.
Intel: Persistent weak revenue?
Yet the path forward will not be easy. Intel’s revenue was $15.3 billion in the second quarter of 2022, down 22% from the second quarter of 2021. In a statement prepared for this July 2022 earnings report , Gelsinger said:
“Results this quarter fell short of the standards we set for the company and our shareholders. We must and we will do better. The sudden and rapid decline in economic activity was the main driver, but the shortfall also reflects our own execution issues. We are responsive to changing business conditions, working closely with our customers while remaining focused on our long-term strategy and opportunities. We are taking advantage of this difficult environment to accelerate our transformation.
Next, Intel plans to announce its third quarter results on October 27, 2022.