Intel CEO Pat Gelsinger said on Thursday announced that the company would soon undergo a round of "targeted cuts." As reported by Oregon Live, the CEO took to a video conference with company employees where he described the cuts as necessary in the wake of high costs and low margins on the myriad of products Intel develops, manufactures and distributes.
The cutbacks aim to reduce Intel's operational expenses to and unlock a way back to profitability. This is happening just months after Intel and other semiconductor companies were awarded a cool $52 billion in government subsidies in the U.S. alone.
Word on the wire estimates Intel may be looking to cut as much as 20% of its workforce in certain divisions, including sales and marketing - equating to thousands of employees out of the company's ~121 thousand employed in 53 countries around the globe. The need to rationalize its operational costs likely stems from the utter beating of Intel shares in just a year, with the company's stock valuation dropping by 50% on the back of a particularly intense macroeconomic pressure. The decline happened even as Intel sought more and more governmental funding - something Pat Gelsinger himself said might have negatively impacted the company's execution.
That impact on execution and the worldwide demand decline for Intel's products was plain to see on the company's Q2 earning reports, where Intel posted a $454 million loss against a clean $5 billion profit during Q2 2021. And considering the current state of the global semiconductor market, Intel's revenue for Q3 2022 could see a further 15% decline.
However, Intel isn't the only tech giant grappling with these issues. AMD recently corrected its revenue projections with an expected $1.1 billion decline for Q3, Nvidia revised its estimates with a $1.4 billion reduction of its own, and Apple reportedly cut component orders for its latest iPhone 14 product by as much as 90%. But while Intel has now confirmed it's going the layoff route, AMD and Nvidia - two companies left out of the U.S. government's $52 billion subsidy and equally affected by the market turmoil - still haven't announced anything to that effect.