Intel to Lay Off up to 20% of Factory Workers
Intel, the leading chip manufacturer, is planning a significant workforce reduction, reportedly letting go between 15% and 20% of its factory employees. Naga Chandrasekaran, the vice president of Intel Manufacturing, communicated this decision to staff on Saturday.
The layoffs are set for July and will impact Intel’s manufacturing facilities globally, especially affecting the company’s main hub in Oregon, where it employs around 20,000 people—the most of any single employer in the state.
This cut comes at a challenging time for Intel, amid ongoing sales declines and a troubling outlook. The company is grappling with intense competition in the PC and data center sectors and has struggled to keep pace with advancements in the burgeoning artificial intelligence market.
Late last year, reports indicated that Intel had parted ways with CEO Pat Gelsinger due to the company’s struggles to meet its revitalization goals.
After a recent board meeting, it was revealed that the board had lost confidence in Gelsinger’s strategy for regaining market share and closing the gap with competitors like Nvidia. Rumors suggest Gelsinger was presented with two options: either resign or be removed. Ultimately, he chose to step down, leading to the appointment of Chief Financial Officers David Jinner and Vice President Michelle Johnston Holsouth as interim co-CEOs while the search for a permanent replacement begins.
In the previous year, Intel had already cut 15,000 jobs, including 3,000 in Oregon, through various means including layoffs and early retirement offers. This time, however, it seems the layoffs will not include voluntary separation options, focusing instead on investment priorities and individual employee performance.
The job cuts will impact various roles within Intel’s operations, affecting everyone from factory engineers to specialized researchers developing next-generation microprocessors. While the specific number of positions being eliminated is still uncertain, it’s clear that thousands—potentially over 10,000—could be at risk.
Intel’s new CEO, Lip-Bu Tan, has emphasized the need to streamline operations and reduce management layers to implement new technologies more quickly. He also aims to attract and retain talented engineers, creating a complex balancing act as the company endeavors to cut back while also promoting a positive future to both current and former employees.
These layoffs occur amidst substantial federal and state funding aimed at supporting Intel’s new and expanded sites in Oregon, Arizona, New Mexico, and Ohio. The Biden administration has approved $7.9 billion in federal grants under the CHIPS Act, with an additional $1 billion secured last year. Yet, many of these funds are under review by the current administration.
Oregon has allocated $115 million in state funding to Intel, although it remains unclear when the planned expansion of the D1X research facility in Hillsboro will commence. State funds are subject to clawbacks if the expansion does not meet employment or revenue targets.
