The semiconductor manufacturer will cut 3,000 employees in Oregon as it looks to trim $10B by the end of next year.
Hillsboro-based chip maker Intel will lay off around 15,000 people, including 3,000 in Oregon, as it struggles to rebound following several difficult years.
CEO Pat Gelsinger announced major cuts last week in a company-wide email, saying “decisive action” is needed after the company posted second-quarter losses of $1.6 billion. Revenue is now down $24 billion since 2020, while Intel has increased its workforce by 10%.
“This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history,” Gelsinger wrote. “This is painful news for me to share. I know it will be even more difficult for you to read.”
Following the announcement, Intel’s stock dropped 19% to $23.54.
Intel now aims to trim $10 billion by the end of 2025, according to Gelsinger. Cost-cutting measures will include making fewer products, ending “non-essential” work and suspending the corporate dividend starting in the fourth quarter of this year.
Intel was a big winner in the Chips and Science Act of 2022, the Biden Administration’s plan to revitalize the domestic chip-making industry. In total, the act allotted $52 billion in grants and $75 billion in loans. Of that, Intel received $8.5 billion in grants and $11 billion in loans. The funding would help Intel add 10,000 U.S. manufacturing jobs and 20,000 construction jobs. But Intel has yet to receive the money and it’s unclear if the company’s financial performance will affect its non-binding agreement with the federal government, according to The Washington Post.
Intel has received an additional $115 million from the state government to subsidize factory build-outs in Hillsboro including upgrades to its D1X research facility, according to The Oregonian.
The company is Oregon’s largest corporate employer with around 23,000 workers. It added around 1,000 positions at its Washington County campuses in 2023.
Intel is far from the only tech company to cut staff this year. Google, Dell Technologies and Tesla have each announced major layoffs.
Intel faces headwinds on multiple fronts as it contends with a slowdown in PC and data markets and intense competition in artificial intelligence, where it’s badly trailing competitors, according to The Washington Post. Rivals continue to establish overseas in China, Taiwan and South Korea to take advantage of much lower labor costs.
VentureBeat reports that in the past year, Intel rival Advanced Micro Devices increased revenue by 9%.
Intel has had to take on outside investors to help finance new manufacturing facilities in Arizona and Ireland, and in June, it halted plans to build a $25 billion factory in Israel.
Intel’s layoffs, which represent around 15% of the company’s workforce, will take place before the end of the year. They will be targeted and not across-the-board. Employees in some departments have been offered staff buyouts, according to The Oregonian, which spoke to an employee on condition of anonymity. In April, an unspecified number of employees were laid off in the sales and marketing departments.
This year, several of Oregon’s largest employers have cut hundreds of jobs. They include Oregon Health & Science University in Portland, Campbell’s Soups in Tualatin, UPS in Portland and Nike in Beaverton.
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