Intel Announced Massive Layoffs And Cuts 15,000 Jobs Worldwide
Intel announced Thursday it would cut 15,000 jobs worldwide, conceding the chipmaker needs major overhauls and that its expensive turnaround plan has not been working as expected.
Thursday’s grim announcement marked the largest number of layoffs Intel has ever announced, cutting 15% of all the jobs at the company. Its shares nose-dived in after-hours trading.
Buyouts and retirement incentives for employees will begin as of next week, Intel told workers on Friday. Layoff notices are due to hit workers soon after.
During a late-night call with staff members on Thursday, Intel stated that the extent of the layoffs will differ depending on the department and that all affected employees will be informed by early October. The last day of layoffs is November 15.
Although the severity of the cuts’ impact on Oregon was not immediately apparent, given that Intel is the state’s largest corporate employer and one of its main economic drivers, they should have a significant effect.
CEO Pat Gelsinger wrote a statement to staff members that was posted on Intel’s website, stating, “These decisions have challenged me to my core, and this is the hardest thing I’ve done in my career.” “In the upcoming weeks and months, I promise that we will place a high priority on fostering an environment of integrity, openness, and respect.”
Intel announced that it would halt its shareholder dividend and slash $10 billion from its projected spending for the upcoming year. The business informed staff that numerous benefits will be cut or eliminated.
It will discontinue providing free food and beverages in Intel gyms, cut the length of its sabbatical policies in half, lower the value of employee stock purchase plans, eliminate free fitness instructors, and permanently ground the Intel Air Shuttle, a fleet of company planes that transports staff members between its main locations in the western United States.
Revenue during the second quarter of the year was $12.8 billion, unchanged from the previous year, and the business predicted an 8% fall for the current quarter. Although Intel reported losing $1.6 billion in the spring and is still losing money this summer, Gelsinger insisted that the company’s approach won’t alter while announcing that challenging times are ahead.
In after-hours trading, Intel shares fell 19% to $23.56. The stock would be at its lowest point in almost ten years if shares trade that low tomorrow, bringing Intel’s market worth down to about $100 billion.
“It hurts to tell you this news,” Gelsinger said to staff members. “I am aware that reading will be significantly more challenging for you. Today is a really difficult day for Intel since we are implementing some of the biggest changes in the history of our business.
At its sites in Washington County, Intel employs 23,000 people. More over 3,000 of those jobs, or nearly the whole North Plains population, would be lost with a 15% cut.
Three employees who asked to remain anonymous because they lacked authorisation to discuss the company said that the dismal quarterly performance on Thursday and the scope of the impending layoffs surprised Oregonians.
For employees, who faced a wave of layoffs and salary and bonus reductions last year, the past two years have been challenging. Later, stock awards from Intel made up for some of the lost salary; however, the value of these grants, along with other stock incentives, has decreased due to the company’s low share price. These grants constitute an important component of the chipmaker’s compensation package.
Workers at Intel stated that they and their coworkers were still taking in the news from Thursday and that they were eager to learn more specifics regarding Intel’s plans to reduce employment and spending. A company-wide meeting was rescheduled for Thursday afternoon at 4:30 instead of the intended time slot of next week.
In the letter he sent on Thursday, Gelsinger informed the staff that Intel’s expenses were excessive and that sales were falling short of expectations. He further highlighted the fact that the company has 10% more staff compared to their number in 2020, even while sales have gone down by over 24%.
It was a little over three years ago that Gelsinger took the reins at Intel with the pledge to invest tens of billions of dollars in new cutting-edge plants and technologies for processing powerhouses.
Even if Intel’s technology improved which it did, within a time period its business has to still wait for years for the new factories, and Nvidia, AMD, and Taiwan Semiconductor Manufacturing Co. and its rivals only keep getting more formidable. The job losses at Intel, too, will intensify scrutiny on the bipartisan CHIPS Act of 2022, one of the biggest laws that were enacted through under the Biden administration. The bill gives Intel an entitlement to $ 8.5 billion in federal subsides, $11 billion in loans, and other tax credits.
Administration and Congress thought that with fat subsidies to the semiconductor industry, the country would grow less dependent upon computer chips manufactured in Asia, and tens of thousands of new manufacturing jobs would be generated.
The advantages of this increased manufacturing capacity might not become apparent for several years, even if Intel and other chipmakers are still constructing those additional factories.
The biggest employer in Oregon, Intel is set to get $115 million in state assistance to support the company’s ongoing expansion at its plants in Washington County. With that state support, the corporation promised to add over 2,600 jobs; if it doesn’t reach its recruiting goals, Intel has to refund the funds.
Although Intel’s largest and most sophisticated facilities are in Oregon, the company’s headquarters are in Silicon Valley. To create each new generation of computer chips, the firm needs thousands of scientists and advanced production personnel.
It’s possible that this prevented the majority of the job losses that occurred in repeated rounds in Oregon last year. In 2023, Intel added 1,000 net positions in Oregon, despite eliminating 5,000 jobs nationwide.
In 2016, Intel announced massive employment layoffs, amounting to 12,000 jobs and those layoffs broke employee trust in former CEO Brian Krzanich and cut a schism in the culture. Krzanich later acknowledged that the mass layoffs were too “harsh and quick.”
He wrote to staff, “We will uphold Intel values throughout this process, and I believe that how we implement these changes is just as important as the changes themselves.”
On Thursday, Intel informed its workforce that it will provide buyouts and incentives for early retirement. To eliminate as many positions as it intends, the corporation will undoubtedly also need to make thousands more layoffs. Gelsinger informed staff members that Intel needed to automate and streamline its processes since they are currently too complicated.
“I don’t think the road ahead of us will be simple. Neither should you,” Gelsinger stated. “We are all having a difficult day today, and there will be more difficult days to come.”
