Intel Corp. is expected to layoff thousands of workers in the coming days in an effort to trim its cost base, as it pursues an ambitious plan to regain its status as the world’s top chipmaker.
That’s according to a report from Bloomberg, which cites anonymous sources as saying the job cuts could be announced as soon as this week. In recent years, Intel has struggled with declining earnings and revenue, and has reportedly been losing market share to its rivals.
Intel, which currently employs around 110,000 people – excluding those who work at its Intel Foundry subsidiary – is set to announce its second quarter earnings results on Thursday, and could well reveal the job cuts then.
Under its Chief Executive Pat Gelsinger, Intel has been investing heavily in research and development to advance the company’s chip technology to compete better with rivals such as Taiwan Semiconductor Manufacturing Co., which is currently the world’s top chipmaker.
The company was once the most dominant player in the semiconductor industry, but in recent years its fortunes have been on the wane. The decline has boosted rivals such as Advanced Micro Devices Inc., which have gained market share in key segments such as the personal computer chip market, at Intel’s expense.
Intel’s shares gained just over 1% on the report, though the company itself declined to comment, Bloomberg said.
While Intel has struggled, rivals such as Nvidia Corp. have raced ahead in the development of advanced chips for the lucrative artificial intelligence segment. AI chips have been in high demand for the best part of two years, and Nvidia’s sales have rocketed, to the point where it briefly became the world’s most valuable publicly-traded company earlier this year. Meanwhile, Intel has struggled to keep up in the development of AI chips, and has also faced uneven demand for traditional central processing units that power PCs, laptops and data center servers. In that segment, it has faced stiff competition from AMD, not helped by significant problems with some of its newest CPUs.
Besides spending money on designing more advanced chips, Intel has also embarked on a factory-building spree, as part of its plan to manufacture semiconductors for other chipmakers. In line with that plan, Intel last year announced the creation of its Intel Foundry subsidiary, which could eventually be spun off as a separate business entirely.
Earlier this year, Intel hired Naga Chandrasekaran from Micron Technology Inc. as its new Chief Global Operations Officer. In that role, Chandrasekaran will oversee the company’s manufacturing operations.
Intel has invested billions of dollars into building new chip factories in the U.S., Europe and Israel, and has gone to some lengths to secure funding for those efforts. As well as receiving billions of dollars in grants, the company has also sold significant stakes in some of its new chip fabs to private equity firms.
But even as it looks to cut costs elsewhere, Intel hasn’t been afraid to spend money when it feels it’s worthwhile. It recently invested $15 million into a AI-focused construction technology startup called Buildots Ltd. At the time, analysts said Intel may be hoping to leverage Buildot’s technology to boost the efficiency of its chip fab construction projects in order to accelerate its recovery plan.
Last year, Intel laid off around 5% of its workforce, which came after a previous round of job cuts in October 2022. The company has also reduced spending in other parts of its business as it looks to balance the books.
Wall Street analysts forecast Intel’s second quarter revenue to remain flat from the same period one year earlier, though they’re confident that sales might pick up in the second half of fiscal 2024. Intel’s full-year revenue is expected to grow by 3% to $55.7 billion, which would represent its first revenue gains since 2021.