Chipmaker Intel Corp. plans significant job cuts, potentially thousands, as the PC market slows, Bloomberg News reported Tuesday, citing people familiar with the situation. According to the report ,layoffs will be announced as early as this month, with cuts affecting about 20 percent of Intel’s workforce in some divisions, including the sales and marketing group.
The pandemic has increased demand for appliances as consumers have been forced to stay at home. High inflation, rising interest rates, and geopolitical tensions hurt consumption in the second half of this year.
Intel’s profit and sales fell in the second quarter, with revenue from its computer business falling 25% to $7.3 billion. International Data Corporation predicted Monday that global shipments of personal computers would likely fall 15% in the third quarter from a year earlier.
The announced layoffs come as Intel returns to the top of chipmaking and restores the US semiconductor industry to prominence lost to Asia.
Intel’s last major round of layoffs came in 2016 when it announced it was cutting 12,000 jobs, or 11 percent of its global workforce. The chip maker had 113,700 employees in July.
In July, the company cut its annual revenue and profit forecast after missing second-quarter results.
Decades of inflation and the reopening of offices and schools have caused people to spend less on computers than during pandemic-related shutdowns. The chipmakers are also under pressure from the containment of COVID-19 in China, the main computer market, and the conflict in Ukraine, which has shaken the supply chain and demand.
Intel CEO Pat Gelsinger issued a memo to company employees on Tuesday outlining plans to create an internal foundry for external customers and the company’s product lines.
The foundry company produces chips that other companies design, and Taiwan Semiconductor Manufacturing Co. is a major player in the field. Until now, Intel has mainly built its own chips.