Intel is reportedly planning to cut thousands of jobs, especially in sales and marketing, as the PC market has seen a historic market decline in the past three quarters.
Bloomberg News reported the job cut action is expected to occur about the time of the third-quarter earnings report on Oct. 27. The report cited unnamed sources and Intel made no immediate comment.
CEO Pat Gelson signaled the possibility of cuts in its second quarter earnings report, noting the chipmaker would be “lowering core expenses in calendar year 2022 and will look to take additional actions in the second half of the year.” The company currently employs nearly 114,000 people worldwide.
Analysts have been following the PC sales decline for the past three quarters with Gartner noting a near 20% decrease in the third quarter compared to a year earlier while IDC put the reduction in shipments at 15%.
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IDC noted that shipment volume in the third quarter was still well above pre-pandemic levels. The drop-off in shipments and sales came after high volumes of purchases during the pandemic. Home and school PC users filled their need for the machines and now have slowed purchases, while businesses are halting purchases partly due to the uncertain economic outlook with inflation, escalating trade tensions and the war in Ukraine.
AMD noted the drop in PC sales and a PC inventory correction in a short pre-earnings statement last week. As a result, the company said preliminary revenues for the third quarter would be down 16% from a prior prediction. AMD’s statement led to a steep decline in its stock price.
Intel shares have dropped 21% in the past month while AMD shares have caved by 32%.
Jack Gold, an industry analyst at J. Gold Associates, said the report of Intel job cuts “is not surprising…With sales down and a predicted recession in the wings, many companies are trying to right size their companies. There is a lot of pressure on the stock price and cutting costs means reinforcing the earnings that affect the stock price. While this is a rumor about Intel, there is likely going to be a shakeout across the entire industry as the market shifts.”
Even so, Gold said the downturn will be an adjustment. “The need for chips of all kinds continues to increase,” he said.