Intel is expected to embark on another wave of layoffs, also in Israel

Intel is expected to embark on a wave of layoffs that will include thousands of employees and will focus, among other things, on the chip division for personal computers, which is very active in Israel. According to several reports that included analysts and employees in social networks, the move is expected to be implemented as early as June, against the background of the company’s weak performance in the past year, the sharp decline in personal computer sales, the delays in product launches, and the growing competition in the field of server processors and graphics processors.

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If senior analyst Dylan Patel of the research company Semi-Analysis is right, then Intel is expected to lay off up to 20% of its personal computing and server and artificial intelligence division employees very soon. According to Patel, each of the units is expected to cut their expenses by about 10%, which will also lead to layoffs. An employee from Intel’s personal computer division anonymously uploaded a post to the “Blind” website, the center for employee evaluations and reviews of their workplace, in which he confirmed Intel’s intention to make further cuts in the division. According to the employee, Intel is looking for employees who will agree to leave in exchange for an increased bonus or an early retirement plan for veterans.

The new round of layoffs, Intel’s third in the last year, has the potential to affect the company’s departments in Israel as well. The personal computing division employs thousands of workers in Israel at development centers in Haifa, Jerusalem and Petah Tikva, and among its senior managers is Shlomit Weiss, who serves as joint general manager of its engineering division. Intel’s servers and artificial intelligence division (DCAI) is also active in Israel, albeit with a more limited presence. Among other things through the artificial intelligence chip company Haana Labs and the group of communication chips for server farms (IPU) which numbers about 450 people in Israel.

A cut of 10 billion in costs on 2025

Intel is suffering from a continuous decline in chip sales to PC manufacturers, and is competing with AMD which recently launched a new series of PC chips. All of these were reflected in the company’s results: Intel reported for the first quarter a loss of $2.8 billion and revenues of $11.7 billion, a 36% decrease compared to the corresponding quarter, although it managed to exceed analysts’ expectations. The sharpest declines in sales were led by the personal computers division, with a 38% decrease in sales, and the servers and artificial intelligence division, with a 39% decrease in revenues.

The layoffs at Intel are being made against the backdrop of efficiency efforts that the company announced at the end of last year, in which it will reduce its expenses by $10 billion over three years. Until now, Intel – like most chip companies – preferred not to go for mass layoffs but to cut back on infrastructure and special projects: Intel, as I recall, canceled the construction of a new development center in Haifa at a cost of $200 million, canceled a refrigeration laboratory in Oregon to the extent of $700 million, and carried out Reorganization in the graphic processors division, which also included the cancellation of the Rialto Bridge project.

Until now, Intel has mainly focused on infrastructure cuts – and tried to avoid layoffs as much as possible. Relative to other giant companies such as Meta, Microsoft and Amazon – Intel, which is in bigger trouble, laid off workers in low volumes.

12 thousand employees in Israel and another 2,000 Mobileye employees

Intel cut many projects, including a refrigeration laboratory in Oregon worth $700 million, an R&D center in Haifa worth $200 million, reorganized the graphics processor division, canceled the Rialto Bridge graphics processor, delayed the Falcon Shores chip, sold the The design of the servers. It must be said that layoffs on a scale similar to this have not been seen. After offering voluntary retirement plans to its employees, it began laying off a few thousand around the world at sites such as the R&D center in Folsom, California, and the company’s centers in Ireland, Oregon, and Israel. In addition, the CEO gave himself a 25% reduction in salary and another 5% for senior managers.

Intel has not significantly increased its workforce in Israel for several years, and it stands at approximately 12,000 employees, in addition to another 2,000 Mobileye employees, who are currently considered employees of an independently traded company. Next month the company in Israel will publish its annual corporate responsibility report in which it will update the number of its employees in Israel. The company’s global headcount, however, increased from 121,100 people at the end of 2021, which was a record year for the company, to 131,900 at the end of 2022. That is, Intel continued to grow even last year when its internal crisis intensified.

Future stabilization? There are also some bright spots

Intel refused to elaborate on the planned move or its geographic distribution, saying that “the company is working to speed up its strategic processes while navigating a challenging macro-economic environment. We are focusing on identifying places where a variety of initiatives can be made more efficient, including through reductions in manpower in certain areas or positions. We continue to invest in our core areas, including global production activities to ensure well-positioned growth for the long term. These are difficult decisions, and we are committed to treating the employees who will be affected by them with respect.”

Despite the difficult situation in which Intel found itself – which also suffered from a delay in the launch of chips for servers – there are some bright spots in which the company hangs: First, Intel expects a stabilization of the decline in sales and sales contracts of a similar, albeit low, volume in the second quarter of the year, and a recovery of the market in the second half . Second, the research company Mercury found that Intel’s loss of market share to competitors in the fields of personal computers and servers has stopped and that Intel, together with AMD – a competing company but one that uses Intel’s software infrastructure, X86 – are managing to increase their large market share in the field of servers. Gelsinger also expresses optimism about the launch of new production lines with “Intel 4” technology, that is, chips based on tiny 7-nanometer electrical circuits produced with ultraviolet lithography technology – something that will help it compete with the Taiwanese manufacturer TSMC.

By Editor

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