Intel aims for $300M savings through layoffs
The memo was distributed to Intel managers and stated that the company will "prioritize investments, slow down hiring, and drive other efficiencies, including a performance-based involuntary separation package."
Cuts will begin June 15 and conclude one month later for an unspecified number of people, the Oregonian reported. Intel has roughly 106,000 employees worldwide.
Intel declined to comment on the layoffs. The company reported record revenues in 2014 and flat year-over-year revenues in the first quarter of 2015, due in part to a decrease in demand for PCs.
Intel had projected 5% growth in 2015 but realigned that forecast in April to expect a flat revenue year. Market watchers say the PC market’s decline is continuing, and Intel’s spending has been 6-10% ahead of its model for more than a year.
Intel would not see the financial benefits of layoffs for over a year, analyst Jon Peddie told EE Times. He speculated that layoffs of 5,000 positions could translate into $1 billion in cost savings.
"All companies will adjust their employment level as a function of revenue [and] as a function of profit. Intel is extremely well managed company and also a very loyal company in terms of taking care of its people," Peddie said.
The recent change in Intel’s revenue forecast suggests the company is not as optimistic about the impact of Windows 10 over the next few years, said Nathan Brookwood, principal of market watcher Insight64.
"When it looks like you won’t have revenues in place, you have to readjust your budget and that has human impacts," Brookwood said, adding that the change in prediction for flat revenue "doesn’t mean they need to make a massive change [in employment]."
The Oregonian reported that Intel has already identified which employees to cut and that it does not plan to publicly announce layoffs. Brookwood said Intel regularly ranks its employees and knows how to "make sure that the people who are being cut are the ones who are contributing the least to the company at the time."
Should layoffs occur, both Brookwood and Peddie believe Intel’s planned acquisition of FPGA maker Altera for $16.7 billion will be unaffected. That deal won’t close for several quarters and Intel is unlikely to make large organizational changes ahead of time, Brookwood said
Last month, The Oregonian reported that Intel offered voluntary buyouts in its manufacturing group.
— Jessica Lipsky is Associate Editor of EE Times
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