Intel has announced plans to lay off a “significant number” as part of a broader cost-cutting measure.
The chip giant says its cost reduction plan will sharpen its spending to $3 billion by 2023, which it predicts will grow to between $8 billion and $10 billion in annual cost reductions by 2025.
Intel Chief Executive Officer Pat Gelsinger said the announcements were “difficult decisions” but the company needs “to balance increased investment in areas such as leadership in TD, product and capacity in Ohio and Germany with efficiency measures elsewhere.”
What does layoffs do?
Intel’s third-quarter revenue of $15.3 billion was down 20% year-over-year (YoY), while the company’s net income nosedived 85% to $1 billion.
Not all parts of the business were equally impacted, Intel’s mobile driver subsidiary performed exceptionally well, with revenue jumping 38% to $450 million.
The company’s data center and AI division was not as successful, its revenue fell 27% to $4.2 billion.
Intel’s client computing group ( CCG ) and its network and edge group also performed poorly, with revenues dropping 17% and 14%, respectively.
Intel isn’t the only big player in the tech hardware space to be laying off workers as of late.
Storage giant Seagate recently announced plans to cut 3,000 jobs as part of cost-cutting measures, about 8% of its international workforce.
Like Seagate, Intel may have been a victim of softening demand for PCs post-pandemic, where it previously derived a large share of sales.
PC shipments will reach 68 million units in the third quarter of 2022, a 19.5% decrease from the third quarter of 2021, according to Gartner statistics.
Intel shares have fallen nearly 50% through 2022 from their peak in January.