Intel Could Be Preparing For Massive Layoffs as Demand for PCs Plunge

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Intel to possibly cut workforce later this month.

Intel
(Image credit: Intel)

According to a report on Bloomberg UK Intel is getting ready to reduce its headcount as a means to reduce costs amid declining sales of PCs. The news comes from "people with knowledge of the situation" so be cautious until it can be verified. The speculated layoffs could affect thousands of people across multiple divisions, according to Bloomberg's unknown source. The company is expected to announce its decision late this month. 

In recent years, Intel has been hiring personnel as it tried to change the fortunes of its key business units and entered new businesses. But apparently the company needs to finally reduce its headcount of 121,000 by approximately 11% (12,000) now that PC sales are declining and the company's data center business is likely to follow suit, according to Bloomberg. 

Intel still has to finalize how many people it plans to layoff, but numbers are expected to be in thousands, Bloomberg reports. Some of Intel's divisions, such as sales and marketing group, could see cuts as significant as 20%, others could be luckier. 

Intel heavily depends on PC sales. Last quarter Intel's Client Computing Group responsible for PCs commanded about 50% of the company's revenue, so if Intel is bracing for a long decline of PC shipments, then management needs to react, which is why it is said to be cutting down its workforce.  

Back in July the company reported its first loss in decades and said its 2022 revenue would be up to $11 billion lower than expected. As it turns out, declines of PC sales were steeper than expected and probably the delay of the company's 4th Generation Xeon Scalable 'Sapphire Rapids' data center platform played its role, so Intel needs to adjust its costs beyond reduction of CapEx. 

What remains to be seen is whether Intel's layoffs will affect any of the company's ongoing projects, such as development of discrete graphics processors for PCs that are hardly competitive against higher-end GPUs by AMD and Nvidia. 

Anton Shilov
Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

5 Comments Comment from the forums
  • InvalidError
    I hope the layoffs focus on the marketing department - too much money being wasted in over-hyping stuff instead of making sure stuff actually works before hyping it.
    Reply
  • cyrusfox
    InvalidError said:
    I hope the layoffs focus on the marketing department
    Marketing sells, market is in a down cycle and marketing is critical to move silicon out of warehouses . Doesn't seem like the right choice.

    Jim Keller talked a bit about this (Apple's refocusing and AMD cuts) in his long form chat with Jordan Peterson. Still trying to digest what he said about anytime he had to fire someone he he never did it fast enough.

    Regardless sad time for those impacted if true, hoping for a brighter future where they are more appreciated and compensated.
    Reply
  • wbfox
    Could have told you this was coming. Same thing that always happens:
    Step 1 Tax revenue shakedown.
    Step 2 Fire the people you just stole from.
    Step 3 Repeat.
    Reply
  • bit_user
    cyrusfox said:
    Marketing sells, market is in a down cycle and marketing is critical to move silicon out of warehouses . Doesn't seem like the right choice.
    It's a balance, but the focus needs to be on RoI. Basically, every $1 spent on marketing needs to bring in at least $1 in profit. That's true when times are lean, at least.

    When you're in a position of greater strength, then perhaps you can focus more on long-term ,strategic goals with a longer payoff (e.g. "building the brand", etc.).

    cyrusfox said:
    Jim Keller talked a bit about this (Apple's refocusing and AMD cuts) in his long form chat with Jordan Peterson. Still trying to digest what he said about anytime he had to fire someone he he never did it fast enough.
    Didn't watch, but I can see the point about making cuts quickly. It's brutal, but if it makes economic sense, then the sooner you swing the axe the more losses you can stop.

    As for firing individuals, it depends. Sometimes, people can adjust and adapt with appropriate guidance. I'm a fan of diagnosing the problem and making fine adjustments, rather than shooting first and asking questions later. However, if someone is way out of line, you sometimes can't afford to wait and let them do more damage. That's not necessarily inconsistent with the statement you quoted (i.e. maybe Jim only fired people who really needed to go).

    cyrusfox said:
    Regardless sad time for those impacted if true, hoping for a brighter future where they are more appreciated and compensated.
    Yeah, though Intel is historically a fickle employer. For a long time, they had a policy of "up or out", where people who didn't get promotions got let go. That, or they'd cut 10% of their workforce pretty much annually, with the idea being to cut low-performers and thereby gradually end up with a top-tier workforce.

    However, such practices have been shown to have serious downsides. They tend to create a paranoid, CYA (cover-your-ass) culture with poor teamwork, lots risk-averse decision-making, and short-term thinking. Short-termism indeed might have played a role in Intel's fab failures and their seemingly endless litany of security flaws.

    I think another downside is that, in order to attract talent to such a company, they probably need to pay more than average.
    Reply
  • watzupken
    InvalidError said:
    I hope the layoffs focus on the marketing department - too much money being wasted in over-hyping stuff instead of making sure stuff actually works before hyping it.
    Sales team will take the brunt for sure. Marketing, less so because you need more aggressive marketing to get people interested to buy. That's assuming these 2 are separate teams. Sometimes marketing also refers to sales.
    Reply