It was a deliberate speculation that was launched by the online service Bloomberg News on October 11, 2022 and was picked up by all high-tech media worldwide as a sensational report: Intel was allegedly planning large-scale staff cuts to boost its profitability. There was talk of several thousand redundancies, up to 20% of the current workforce of more than 113,000 employees, preferably in sales and marketing.
At Intel's annual press conference on October 27, there was no explicit mention of this. However, it became clear that a strict cost-cutting course is now being implemented at the historical leader in the chip industry. The decline in results at the end of the third quarter was confirmed. Compared to the same quarter of the previous year, sales fell by a good 20 % to 15.3 billion dollars. The quarterly profit also showed a drop of 85% to $1 billion. The outlook for the fourth quarter is similar.
The 'bad news' was already apparent in July, with the prospect of significantly lower annual sales in 2022 than previously projected. The consequence on the part of the management: a reduction in "core expenses in calendar year 2022", according to Intel CEO Pat Gelsinger.
For 2023, this means cutting expenses by at least $3 billion. Intel also intends to reduce expenditure by the same amount in subsequent years - by up to USD 10 billion by the end of 2025 - and thus continue to invest billions in new fabs worldwide as planned. Gelsinger also hinted at the sale of business units that no longer fit into the business concept in an interview with the Wall Street Journal.
The overall result for 2022 is only expected to reach USD 64 billion (previously USD 76 billion). This is said to be due to the declining demand for PC processors. According to Gelsinger, the number of PCs sold worldwide is expected to fall to around 295 million in the 2022 calendar year. Consumer concerns about inflation, export restrictions to China and the saturation of demand in the PC and data server sector following the coronavirus-induced home office boom in recent years are also reflected in the sales figures of other processor providers such as AMD, Nvidia, ARM and Oracle. There are also signs of a downturn at users Dell and Lenovo.
Gelsinger remained vague about the announced redundancies and spoke of "steps to optimize our workforce". However, "a balance with the increased investment in production capacities in Ohio and Germany is necessary."
Looking back historically, the last major wave of redundancies at Intel was in 2016, when 12,000 jobs (11% of the workforce) were cut. Since then, there have only been internal trimming measures, such as the discontinuation of the production of chips for cell phones and drones. However, a hiring freeze has been in place since the beginning of the year.
