Intel may be preparing aggressive rounds of job cuts
Earlier this month, we covered the relentless shrinking of the PC market and the departure of long-time Intel executives in Intel’s mobile segments. It now looks as though these troubles are going to spark problems for the company’s employees. Intel may be considering significant layoffs that would cut the company’s headcount by double-digit percentages.
The Oregonian reports that Intel currently employs 107,000 people worldwide. It’s recently been on a hiring spree in Oregon itself, with 19,500 people there total (up 5% from last summer). Much of that work has been done on Intel’s leading-edge research firm, Fab D1X, and might not be affected by the cuts. Last year, Intel trimmed 1100 jobs; but this year’s cuts would dwarf that figure if the rumors are accurate.
“After seeing the upheaval in senior staff, it would not surprise me if structural changes are finally afoot,” Jim McGregor, an analyst with Tirias Research, told the Oregonian.
Intel’s problem is easy to diagnose and extremely challenging to fix: The company’s mobile efforts have not yielded the kind of fruit that Intel wanted. Contra-revenue shipments boosted the company’s raw share of the tablet market and gave x86 chips plenty of shelf space, but contra-revenue shipments are a short-term measure meant to build market share at the cost of quarterly or yearly profits. They aren’t a long-term solution, and Intel knows it.
Intel hit its tablet shipment goals, but not at the kind of revenue it wanted.
The problem here isn’t that Intel is in bad shape as such — there’s no sign that ARM is advancing in critical HPC or data center markets, and the PC market, while continuing to trend downwards, still generates tens of billions of dollars for Intel every year. The problem for Intel is that for the first time in decades, computing is advancing under banners other than its own. We’ve talked before about the challenges the company faces in reclaiming a tenable position in emerging markets and it’s still unclear how Intel will take an active role in these spaces without either overhauling its manufacturing strategies or its product development cycle — and maybe both.
Intel will announce its Q1 2016 results on Tuesday, and the figures aren’t likely to be great. The company has made a number of changes to its roster and its focus in recent years, including buying Altera last year for $16.7 billion. If it plans to announce some focus shifts or new project strategies, we may find out more about them this week. The company has previously stated that it will focus on three main pillars of growth — data centers, the Internet of Things, and memory technologies like the recently demonstrated Optane (aka 3D XPoint).