Intel jobs may be hit by slumping PC sales: Report

Intel is reportedly planning to cut thousands of jobs as soon as this month in the face of slumping PC sales and decline in demand for their processors, according to a Bloomberg report. 

The chipmaker had 113,700 employees as of July. The cuts are expected to be announced around the same time as the third quarter earnings report, which will be released on October 27. As of now, cuts are going to affect divisions like sales and marketing. The layoff announcements could affect 20% of staff, according to the Bloomberg report, citing inside sources. 

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Third quarter sales for PCs fell by 15% in comparison to last year, according to IDC, a market analysis firm. It’s not just Intel that has been hit, manufacturers like HP, Dell and Lenovo have also seen a sharp decline in sales.

PC sales were in a slump since at least 2016, when 270 million units were shipped worldwide, the dial moved very little until 2019. That year, number of units shipped came in at 263 million, according to Gartner. However, with the onset of the COVID-19 pandemic there was an 18% jump in FY 2020 with 309 units shipped. That number went up further in FY 2021 when an 11% increase was recorded, with 342 million units sold. However, global PC shipments have declined sharply since the first quarter of FY 2022, with 77.3 million units being shipped in the first three months, a 7.3% decrease

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In addition, Intel announced in July that 2022 sales would be $11 billion lower than it had initially forecast. Bloomberg reported analysts as saying that third quarter revenue is expected to drop by 15%. 

For comparison, in FY 2019, Intel’s net revenue was $72 billion with the company estimating a 2% increase as part of its outlook for the following year. The company blew past that estimate in FY 2020 with a revenue of $77.9 billion but then dipped in FY 2021, totalling revenue at $74.7 billion. 

During the second quarter earnings call, Chief Executive Officer Pat Gelsinger acknowledged that the company could make changes to boost profit. “We are also lowering core expenses in calendar year 2022 and will look to take additional actions in the second half of the year,” Gelsinger said at the time. 

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The company’s decision to cut jobs at this time is likely to cause confusion amongst employees. Earlier this year, the company had been at the forefront of lobbying groups in an attempt to get a $52 billion chip-stimulus bill passed. In fact, Gelsinger had at the time said that the new funds would help Intel make the largest chipmaking hub in Ohio. 

The last time Intel made such drastic layoffs was in 2016, when the company axed 11% of its employees, or a total of 12,000 jobs. Since then, it has shuttered smaller divisions including its cellular modem and drone units.