Intel Corp has announced that it is making cuts in operations and sales department as part of the company's turnaround plan for 2023.
According to The Verge, the chipmaking company confirms that it will lay off thousands of workers as part of its plan to cut its spending costs.
Intel Is Cutting Jobs As A Cost-Saving Measure
With a plunge in demands for PCs in the past few months, Intel Corp is embarking on an aggressive push cutting costs to navigate its Q3 earnings.
CEO Pat Gelsinger says that as part of their plan to cut around $3 billion in spending over next year, the company would take some of it from "people costs."
This means that Intel is reducing the work hours of some of its employees in the factory, hoping that the company can save around $8 to $10 billion annually.
The Intel CEO adds that the cuts with respect to people costs, however, is only a small part of their overall cost structure since efficiency of the factory network is still a priority, Euro News writes.
Intel is also reportedly cutting its capital spending by millions for this year from a forecast of $27 billion to only $25 billion, but adjustments in the workforces can be an immediate solution.
Intel, like others in the industry, is facing a shift in the availability of semiconductors since the pandemic gave way to overproduction of certain segments of PCs.
This change from shortage to surplus will negatively impact revenues of companies across the chip industry, calling for a reevaluation of costs and margins, Gartner analyst Gaurav Gupta says.
The Verge writes that the same shift has caused Intel Corp to lose half a billion dollars in Q2, and a billion dollars in profits in Q3.
However, Oregon Live reports that Gelsinger has hopes to reclaim the company's position as a leading manufacturer of chips through an accelerated timetable for new chip technologies.
Intel Corp Has Been Continuously Losing Market Value
Government Technology writes that the Intel Corp CEO is having a difficult time reviving the business after years of technological setbacks, but remains adamant to keep Intel on track.
This is due to the inflation in the market that put the company in a difficult position, causing Intel's stock to lose half of its market value in 2022.
With this, Intel seems to be in a poor position against rivals who are in chip design or manufacturing, causing investors to lose hope as well.
While the chip industry is naturally cyclical, the slowdown in Intel's sales seemingly came at the wrong time since the company is currently attempting a long-term turnaround.
Bernstein analyst Stacy Rasgon says that the path of the turnaround was built on a shaky foundation since the collapse traced back to the pre-COVID period, Government Technology reports.
"Our products weren't shipping new products like Sapphire Rapids, but as those are now in full production and we're going to be ramping those aggressively," Intel's CEO tells Euro News.
Still, Gelsinger remains optimistic that Intel Corp can expect to land itself on an addressable market with 370-295 million unit sales in 2023.
