Intel plans major job cuts and billions in savings as profits plummet

Intel announced plans to make a “significant number” of layoffs as part of broader cost-cutting measures.

The chip giant says its cost-cutting plan is set to reduce costs by $3 billion in 2023, which it predicts will grow to between $8 billion and $10 billion in annual cost reductions by the end of 2025.

Intel CEO Pat Gelsinger said the announcements were the result of “difficult decisions” but that the company must “balance increased investment in areas such as TD leadership, product and capacity in Ohio and Germany with efficiency measures elsewhere.”

What’s driving the layoffs?

Intel’s third-quarter revenue of $15.3 billion was down 20% year-over-year (year-over-year), while the company’s net income plunged 85% to $1 billion.

Not all parts of the business were affected equally, with Intel’s driver assistance subsidiary Mobileye performing remarkably well, with revenue jumping 38% to $450 million.

The company’s data center and artificial intelligence division were not so lucky, with revenue falling 27% to $4.2 billion.

Intel’s Client Computing Group (CCG) and Networking and Peripherals also underperformed, with revenue down 17% and 14%, respectively.

Intel isn’t the only big player in the tech hardware space to be laying off workers recently.

Storage giant Seagate recently announced plans to cut 3,000 jobs as part of cost-cutting measures, around 8% of its international workforce.

Like Seagate, Intel may have fallen victim to the softening demand for PCs since the pandemic, where it previously generated much of its sales.

PC shipments totaled 68 million units in the third quarter of 2022, down 19.5% from the third quarter of 2021, according to Gartner statistics.

Intel shares have fallen nearly 50% so far in 2022 from their peak in January.