Intel To Cut Off 15% of its WorkForce: Here are the Reason

Semiconductor giant Intel Corporation recently declared it would be downsizing its workforce by dismissing about fifteen percent of its workforce. This is due to various factors such as market condition, operation effectiveness, financial result, and change in business using modern technology.

The Causes of Layoffs

Market Shifts:

The market for semiconductors is changing at a very fast pace and is giving tough competition to its competitors like AMD and Nvidia. Intel has been under the pressure to create new products and solutions for the modern world and emerging tech like AI and machine learning. To sustain its market position, Intel is reallocating capital away from the established business units that it is currently cutting jobs in.

Operational Efficiency:

Intel wants to automate its operations and cut costs. The company will be concentrating on enhancing productivity and efficiency in the business model in order to assure sustainability in the long term.

Financial performance has been on the rise though not very consistent in the recent past. On the flip side, Intel has experienced some gains in some areas namely the data center segment, it has been a tough struggle in the PC space. The layoffs are a part of a plan to enhance the organization’s financial position and channel resources to the high-margin businesses.

Technological Change Intel is moving towards the next level of manufacturing techniques that include 7nm and 5nm chips. This change also implies massive research and development budgets, and thus a shift in the personnel to these important operations.

Effects on Workers and the Expected Trend:

The cut is likely to impact workers in the hundreds if not the thousands in different departments of the company. Intel has assured affected employees of various support such as severance package as well as career advice. Nevertheless, Intel is still positive about the future.

The current Intel CEO Pat Gelsinger stressed that the company should learn from the changing market environment. We needed to make this decision to stay ahead of the curve and continue the tradition of leadership that we set in the technological world,” Gelsinger said.

Industry Reactions:

This has received different feedbacks from the public. Some critics have applauded the move, arguing that Intel has to let go of some of its workers to remain relevant in the market while others have fears of the company losing some of its best brains.

Patrick Moorhead, principal analyst at Moor Insights & Strategy said that, “Layoffs are a necessary part of Intel’s efforts to strengthen its development in the main areas of growth”.

Conclusion

The decision by Intel to let go 15% of its employees is strategic in that it solves some key problems. As the company adaptive to these changes it continues to concentrate on research and development and dominance in the semiconductor industry. As for the long-term consequences of these measures, they will largely depend on how the management of Intel will handle the company’s resources and seek new promising developments.