Intel confirmed plans for layoffs in Q4 of 2022, and will reduce overall annual company costs by $8 billion to $10 billion by the end of 2025. Still, actual Intel headcount staff cut figures were not disclosed.
Intel CEO Pat Gelsinger provided clues about the job cuts to Reuters and to Bloomberg. Still, most of the cost cuts apparently will involve infrastructure such as factories, the interviews revealed.
The statements surfaced amid Q3 of 2022 earnings results from the struggling chip giant. Among the pain points: Third-quarter GAAP revenue was $15.3 billion, down 20% from the corresponding quarter last year.
In early October, reports swirled that Intel job cuts would allegedly impact thousands of employees and roughly 20% of staff in some divisions, Bloomberg reported at the time.
Meanwhile, PC shipments plummeted 19.5% in Q3 of 2022, Gartner revealed. The figure represents the steepest PC market decline since the mid-1990s. The current PC market slowdown comes after millions of consumers and businesses purchased new PCs for remote work during the coronavirus pandemic. Moreover, businesses have embraced "more selective IT spending" during the current geopolitical and economic uncertainties, Gartner said.
Among the market victims: Intel rival AMD said revenue will be approximately $5.6 billion for Q3 of 2022 -- which is a staggering $1.1 billion or so less than AMD's previous financial forecast, that company said on October 6, 2022.
Related: See all technology industry layoffs for 2022 listed here.
Intel Business Challenges
Intel's business problems started long before the current PC market implosion. Indeed, Intel hired former VMware CEO Pat Gelsinger in 2021 to shake up the slumping hardware company. An Intel reorganization arrived in June 2021. Also, M&A expert Matt Poirier arrived in May 2022. But so far, Gelsinger's business moves have yet to pay major dividends for investors.
Much of the Intel turnaround effort hinges on the IDM 2.0 strategy, which calls for Intel to:
- Continue to build most of its technologies in Intel factors;
- expand its use of external foundries to make some Intel products; and
- Intel Foundry Services will service the “exploding global demand for chips.”
Also, Intel is planning to launch an IPO for its Mobileye Global business unit.
Intel: Continued Revenue Weakness?
Still, the path forward won’t be easy. Intel’s revenue was $15.3 billion in Q2 of 2022, down 22% from Q2 of 2021. In a prepared statement about that July 2022 earnings report, Gelsinger said:
“This quarter’s results were below the standards we have set for the company and our shareholders. We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues. We are being responsive to changing business conditions, working closely with our customers while remaining laser-focused on our strategy and long-term opportunities. We are embracing this challenging environment to accelerate our transformation.”
Next up, Intel plans to announce Q3 earnings on October 27, 2022.