Report: Intel plans layoffs as shrinking demand punishes PC makers

Intel is planning its first major layoffs in nearly six years, according to a new Bloomberg report. The report said the layoffs are “likely”to affect thousands of the 113,700 employees, especially in sales and marketing, and that they could happen as early as this month. Bloomberg reports that the last major layoffs at Intel occurred in 2016.

The proposed layoffs are the latest sign of trouble for the PC market and for companies that make and sell PC components. Intel’s year-over-year revenue for the second quarter fell from $19.6 billion in 2021 to $15.3 billion in 2022 due to the contraction of Intel’s business in the consumer PC and server segment, and the company’s forecast for the third quarter was equally gloomy.. Nvidia missed its latest $1.4 billion quarterly revenue guidance as GPU shortages eased and cryptocurrency demand dried up. And while AMD is benefiting from Intel’s weaker position in the server market in particular, it also signals that weakening PC demand will put the company about a billion dollars behind its third-quarter revenue forecast .

With the onset of the COVID-19 pandemic, both businesses and individuals have wasted more and more PCs, so there are simply fewer people now who need new PCs, regardless of bigger issues like inflation or a recession. Renowned analysts cannot agree on how much the PC market has shrunk this year, but they all agree that sales have fallen by double digits due to declining consumer and business spending. IDC reports third-quarter sales fell 15% year-on-year, the most optimistic figure yet: Gartner claims they fell 19.5% and Canalys says they fell 18%. (However, IDC notes that shipments remain “well above pre-pandemic levels.”)

Recession or not, all these companies are rushing forward with new products, many of which are much more expensive than their immediate predecessors. The AMD Ryzen 7000 series costs the same or slightly less than the 5000 series when it launched, but requires the purchase of an expensive new motherboard and DDR5 RAM. Nvidia just released a $1,599 flagship GPU. And Intel is forging ahead with both its 13th Gen Core processors and its first dedicated gaming GPUs (although to be fair, Intel is clearly not chasing high-end enthusiast sales with the Arc A770 and A750).