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Monday, June 24, 2024

More layoffs are coming as Intel’s brutal start to 2023 gets worse

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Big tech firms haven’t enjoyed a good start to 2023. The wider economy, the war in Ukraine, lingering pandemic related issues, and soaring inflation has meant many of the world’s biggest companies—including Meta and Alphabet among others—have taken huge hits to their bottom lines. Sadly, for those involved, that means staff cuts. Intel is the latest company to announce a new wave of layoffs.

Just a couple of weeks back, Intel released a grim set of financial results. It saw a loss of $2.8 billion, the largest in the company’s history. Add to that a massive 36% drop in overall revenue and it’s no surprise that Intel is seeking to tighten the purse strings.

Rumors began to surface last week, with Dylan Patel of Semi Analysis tweeting about major budget cuts and layoffs. Though unconfirmed at the time, Intel has since released a statement to Tom’s Hardware, which follows:

“Intel is working to accelerate its strategy while navigating a challenging macro-economic environment. We are focused on identifying cost reductions and efficiency gains through multiple initiatives, including some business and function-specific workforce reductions in areas across the company.

“We continue to invest in areas core to our business, including our U.S.-based manufacturing operations, to ensure we are well-positioned for long-term growth. These are difficult decisions, and we are committed to treating impacted employees with dignity and respect.”

Very unfortunate news, but massive layoffs at Intel coming!Intel’s Datacenter and Client computing groups are receiving ~10% budget cutsIt’s up to divisions to figure out how to cutGiven fixed costs, means as much as 20% layoffs in groupsLTD (process node) unaffected$INTCMay 7, 2023

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That’s a polite way of saying there’s pain on the way. It’s not easy to cut double digit percentage chunks of your budget, especially in the capital heavy industry Intel is a part of. Money has already been spent on products and manufacturing that are many years away from seeing the light of day.

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There’s still some positive news for us PC gamers though. Intel continues to invest in its product portfolio and its 14th Gen Meteor Lake CPU family is on track, as are future generation CPUs. Its process roadmap and stated aim to compete with and beat TSMC is also going to plan according to Intel CEO Pat Gelsinger, and it maintains this won’t be affected.

Though losing talent is always going to have some impact, whether immediate or down the line.

Intel remains committed to US based manufacturing, in part thanks to the passage of the CHIPS act, which aims to bring high tech manufacturing back to the US and disrupt the growing power of Asia based manufacturing. 

As long as the global economy continues to struggle, however, jobs even in the biggest tech companies will continue to be in jeopardy. The outlook for the PC industry in the second quarter isn’t looking especially great either, but at least Intel is taking steps to weather the storm.

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