Chip maker Intel has confirmed it will lay off workers to reduce spending by billions of dollars. This layoff announcement by Intel comes after Bloomberg reported earlier this month that Intel Corp was preparing a significant decrease in employment, possibly numbering in the thousands.

As part of its third-quarter earnings, the company announced plans to cut around $3 billion in costs over the next year. Intel’s CEO Pat Gelsinger told Reuters that "people costs" will contribute to that reduction.

“We are planning for the economic uncertainty to persist into 2023,” CEO Pat Gelsinger said on a conference call with analysts. A global recession is possible, said Intel’s finance chief David Zinsner.

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He said Intel was working on reducing factory work hours for some employees. By the end of 2025, the company hopes to have cut its costs by $8-10 billion a year.

According to Gelsinger in his Reuters interview, Intel is focusing on its factories and fabs to save money because people costs are relatively small.

The finances

With its earnings, the company has turned the corner — it lost half a billion dollars in the second quarter, but this (September) quarter, it made a billion dollars. This number was, however, 85 percent lower than the number for the third quarter of 2021, when Intel had its best financial year ever.

Its Client Computing Group, which includes PC chips, generated $8.12 billion in revenue, down 17 percent as compared to the corresponding period a year ago, but above average analysts' expectations of $7.58 billion.

Following two years of consumers buying computers to work, study, and play games from home during the pandemic, Gartner reported that PC shipments dropped almost 20 percent in the third quarter.

Intel said that PC demand softened in the quarter, mainly in consumer and education markets, where PC makers reduced their inventories.

The forecast

Coming on the forecast for the full year, in the post-earnings call, Intel’s management notified that they had trimmed the forecast for the full fiscal year.

The company now sees $1.95 in adjusted earnings per share and $63 billion to $64 billion in revenue, compared with $2.30 in adjusted earnings per share and $65 billion and $68 billion in revenue estimated three months ago. That implies a decline in revenue of almost 20 percent.

Intel is faced with an industry-wide shift in semiconductor availability as the pandemic shortages give way to overproduction in certain segments — a problem also affecting competitors AMD and Nvidia.

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