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News broke late last night that Intel is reportedly preparing to lay off, is planning major reduction in headcounts as numbers can be reduced up to thousands, to cut costs and to cope with current computer market according to the people with knowledge of the situation
The layoffs will be announced as early as this month, with the company planning to make the move around the same time as its third-quarter earnings report on Oct. 27, said the people, who asked not to be identified because the deliberations are private. The chipmaker had a total of 113,700 employees as of July 2022.
Intel could reportedly cut more than 22,000 of its 113,700 employees (roughly around 20%), Bloomberg reported, following a disappointing company financial forecast in July it blamed on a “sudden and rapid” economic decline, while its shares shrank by more than half over the past year, to $25.04
Intel’s last big wave of layoffs occurred in 2016, when it trimmed about 12,000 jobs, or 11% of its total. The company has made smaller cuts since then and shuttered several divisions, including its cellular modem and drone units. Like many companies in the technology industry, Intel also froze hiring earlier this year, when market conditions soured and fears of a recession grew.
The latest cutbacks are likely to be meant to reduce Intel’s fixed costs, possibly by about 10% to 15%, Bloomberg Intelligence analyst Mandeep Singh said in a research note. He estimates that those costs ranges from at least $25 billion to $30 billion as of now.
Here’re some important things you should know.
◾️ How many jobs could be lost at Intel this time? If the reports are accurate, Bloomberg says the job cuts will likely number “in the thousands.” As of July 2022, Intel had 113,700 employees. If the company matched 2016’s job cuts, then 12% of the current workforce equals nearly 14,000 employees. However, there is no suggestion yet that the job cuts could be equal in measure.
◾️ Why is Intel likely to cut jobs? In short note, profits aren’t great. Most recently, in July, Intel warned that profits for its current fiscal year may be $11 billion lower than the company originally anticipated. The company’s margins have also shrunk down.
◾️ How could the layoffs impact Intel investors? Bloomberg notes that Intel may also cut its stock dividend to shore up its cash flow; however, such a move is not a lock yet.
◾️ How has the layoff report affected Intel stock? The news of expected layoffs hasn’t impacted the stock much. However, at the time of this writing, INTC stock is up 1% in pre-market trading, suggesting investors see layoffs as a way to help boost the company’s bottom line.
Some chipmakers, including Nvidia and Micron Technology Inc., have said they’re steering clear of layoffs for now. But other tech companies, such as Oracle Corp. and Arm Ltd., have already been cutting jobs.