Chip-maker Intel will begin to lay off workers soon as the company plans to drive nearly $3 billion in annual savings in the near term and $8 billion to $10 billion by the end of 2025, and these savings will majorly come from “people costs” from both operations and sales departments.
Intel CEO Pat Gelsinger, during the company’s Q3 earnings call, said that we are responding to the current environment by taking aggressive actions to reduce costs while mindfully protecting the investments needed to accelerate our transformation, ensuring we are well-positioned for long-term market growth.
“In addition to reducing near-term costs, we have also identified structural cost reductions and efficiency drivers. In aggregate, our efforts should drive $3 billion in annual savings in the near term and $8 billion to $10 billion by the end of 2025,” Gelsinger said late on Thursday.
“Inclusive in our efforts will be steps to optimise our headcount. These are difficult decisions affecting our loyal Intel family, but we need to balance increased investment,” the Intel CEO announced.
“We’ll start with a focus on driving $3 billion of cost reduction in 2023, one-third in cost of sales and two-thirds in operating expenses,” said the company.
Reports surfaced earlier this month that the chip-maker is planning job cuts that can run in thousands, especially hitting its sales and marketing teams, as consumer PC sales nosedive globally.
Intel posted $15.3 billion in revenue in Q3, flat sequentially. Operating loss was $378 million, $156 million worse than year over year “due to softer demand and product readiness impacting inventory valuation”.
Operating income was $142 million, up $15 million from Q3 2021, primarily due to higher revenue, said the company.
Gelsinger said the company is not satisfied with results and “we remain laser-focused on controlling what we can, and we are pleased that our PC share stabilised in Q2 and is now showing meaningful improvement in Q3”.