Chipmaker Intel is reportedly planning major layoffs, which could number into the thousands, in the face of a slowdown in the personal computer market.
The layoffs will be announced earlier this month and could cut up to 20 percent at some Intel divisions, including the sales and marketing group, Bloomberg News reported Tuesday, citing people with knowledge of the situation.
The company had 113,700 employees as of July, when it cut its annual sales forecast by $11 billion after missing estimates for second-quarter results.
Intel, based in Santa Clara, California, declined to comment on the job cuts when reached Wednesday.
Chipmaker Intel is reportedly planning major layoffs due to the slowdown in the personal computer market, which could number into the thousands.
Intel, the world’s largest semiconductor chip maker by revenue, has been relatively poor compared to the industry as a whole, with Intel shares falling 52% so far this year.
Intel has been battered by changing market trends, including the decline of traditional personal computers, as the rise in popularity of smartphones and tablets.
In the last quarter, global PC shipments, including desktops and laptops, declined 15 percent compared to a year ago, according to IDC.
Top computer makers Lenovo, HP, Dell and ASUS all saw sharp declines in shipments for the quarter, with Apple alone seeing growth in the top five manufacturers.
Other factors are also weighing on the PC market, including inflation and supply chain issues, and a decline in remote working as offices and schools reopen after the pandemic.
Intel, the world’s largest semiconductor chip maker by revenue, has performed relatively poorly compared to the industry as a whole, with Intel shares falling 52 percent so far this year.
One of the pioneers of personal computing, a young Bill Gates is seen with an early PC in 1984. As smartphones and tablets increase, the demand for personal computers decreases.
A display of Apple iPads is shown at a Costco warehouse in Thornton, Colorado, in July. Apple uses its own silicon for the iPad, which is mainly based on the ARM architecture
The reported layoffs come at an odd time for Intel, which recently heavily lobbied Congress for a $52 billion stimulus bill for chipmakers.
Last month, the company announced plans for $20 billion Ohio Semiconductor facilities in the presence of President Joe Biden.
In a speech at the event, Biden said he wanted to bury the term ‘rust belt’ and start calling it the ‘silicon heartland’.
To win the project, Ohio offered Intel about $2 billion in incentives, including a 30-year tax break.
Intel says that when the company’s two factories, known as fabs, open in 2025, the facility will employ 3,000 people, with an average salary of about $135,000. The construction of the fab is expected to require 7,000 construction workers.
Last month, Intel announced plans for $20 billion worth of Ohio Semiconductor facilities in the presence of President Joe Biden.
In July, Intel CEO Pat Gelsinger said plans for the new factories would go ahead, despite the recent market hurdles the company has faced.
“You don’t build factories like this on a two-quarter cycle basis,” Gelsinger told Reuters at the time. ‘The semiconductor industry is doubling in a decade and I need the ability to grow into that opportunity.’
On Tuesday, Gelsinger issued a memo to company employees outlining plans to build an internal foundry model for external customers and the company’s product lines.
A foundry business makes chips that other companies design and Taiwan Semiconductor Manufacturing Company is the top player in that space.
Intel has mainly manufactured chips that it has so far designed itself.
