Intel CEO Pat Gelsinger: ‘Hard Decisions’ Coming On Layoffs

Gelsinger told employees via video Thursday that Intel on November 1 will provide details about planned headcount reductions as the company looks to cut costs.

Intel appears to be inching closer to layoffs after CEO Pat Gelsinger told employees the company is planning cutbacks.

Oregon Live, the web version of The Oregonian newspaper, Thursday reported that Gelsinger told employees via a video address that he would provide more details about the cutbacks on November 1.

The Oregonian, quoting an Intel employee who saw the video, reported that Gelsinger in the video said, “These are always hard decisions, but our costs are too high and our margins are too low. We have to take actions to address them.”

[Related: Intel IDM 2.0 Part 2: Intel Creates Internal Foundry Model]

An Intel spokesperson told CRN via email that the company is not commenting on the Thursday report.

Gelsinger’s reported comments come after multiple reports that Intel is planning on reducing headcount by multiple thousands of people on or after the company reports its third fiscal quarter 2022 financials, which it is slated to do on October 27.

Intel, which as of July had 113,700 employees, late July reported that second fiscal quarter 2022 revenue of $15.3 billion, which was down 22 percent year over year led by a 25 percent decrease in revenue related to its client computing business. Intel in 2021 had 121,000 employees, the company said.

Likely Intel layoffs are coming at a time when the worldwide PC market is showing signs of a contraction and IT spending growth overall is slowing.

Gartner this week said overall worldwide IT spending is due to rise about 5.1 percent in 2023 over 2022, but that is a lower growth rate than the 6.1 percent the company forecast three months earlier. The client device market next year is likely to actually fall 0.6 percent compared to this year, Gartner said.

Rival analyst firm IDC earlier this month forecast third quarter 2022 PC shipments will drop a sharp 15 percent compared to those of third quarter 2021, while market research firm Canalys estimated at the same time that worldwide combined shipments of desktop and notebook PCs fell 17.7 percent over the same period.

Intel rival AMD earlier this month reported preliminary third fiscal quarter 2022 financial results, saying that revenue for the quarter is likely to fall around $1.1 billion to about $5.6 billion.

Intel, in the meantime, has broken ground on its planned $20 billion semiconductor manufacturing facilities in Ohio, to be built in part with financial support from the U.S. government’s CHIPS Act, and also plans to invest another $20 billion in two new fabs in Arizona and $3.5 billion in a new New Mexico semiconductor packaging facility.