Is the PC not selling…Intel will lay off thousands of people
Bloomberg reported on the 11th (local time) that U.S. semiconductor company Intel is cutting thousands of jobs. While the global PC market is in a deep slump this year, Intel plans to reduce costs through layoffs.
Citing multiple sources familiar with the issue, Bloomberg reported that the announcement of the job cut will come around the third-quarter earnings report scheduled for the 27th of this month. The cuts will be conducted in several departments, including sales and marketing groups, and some departments will reportedly cut up to 20%.
Intel is suffering from a sharp drop in demand in its main business, PC processor, due to the contraction of the global PC market this year. Gartner, a market research firm, estimated that global PC shipments in the third quarter of this year were 68 million units, down 19.5% from a year ago.
The semiconductor war between the U.S. and China is also one of the negative factors facing In tel. The U.S. administration of Joe Biden last week introduced measures to restrict the sale of semiconductor technology and equipment to U.S. technology companies and Chinese companies. In tel, which was aiming for the local supercomputing CPU (central processing unit) market, is also expected to be hit.
In July, Intel lowered its sales forecast for this year by about 10% compared to the previous year, but experts say its actual performance could be worse. Industry analysts expect Intel’s third-quarter sales to fall 15 percent from a year earlier. In tel’s margin rate has also decreased from nearly 60% in the past to 15% now.
At the time of the announcement of its second-quarter earnings, In tel announced that it could cut its workforce to improve its bottom line. Intel CEO Pat Gelsinger said, “We will reduce spending in fiscal 2022,” adding, “We are looking into additional measures that can be taken in the second half of the year.”
Mandeep Singh, an analyst at Bloomberg Intelligence, estimated that Intel could reduce fixed costs by about 10-15% through large-scale job cuts. He said that Intel may have to cut dividends in the future.
However, Singh said, “If we list Mobile Eye, Intel’s self-driving subsidiary, we will be able to ease the pressure to cut dividends.” Currently, Intel has applied for Mobile Eye’s listing on NASDAQ. The target market capitalization is $30 billion (about 42.735 trillion won), which is expected to be the largest IPO this year if it is listed within this year.
It was the last time in 2016 that Intel started a large-scale reduction. At that time, Intel cut about 12,000 employees, or 11 percent of its employees. Since then, small-scale job cuts have been carried out several times. Recruitment had been suspended this year amid poor market conditions and concerns over a slowdown.
Intel shares fell more than 50% this year alone, but fell 20% last month alone. It fell 0.63% to $25.04 on the 11th.