Chipmaker Intel last week confirmed that it will be implementing a round of layoffs - the third over the past year - in order to reduce costs. Several reports say that thousands of layoffs will begin next month with a focus on the PC chip making division which is very active in Israel. Intel's economic performance has been hit hard over the past year by the sharp fall in PC sales, delays in launching products and growing competition in datacenter processers and graphic processors.
SemiAnalysis chief analyst Dylan Patel predicts that Intel could shed 20% of its workforce in the Datacenter and AI and Client Computing Groups due to the need to cut spending by 10%.
The new round of layoffs has the potential to affect the company's activities in Israel. The Client Computing Group has thousands of employees 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 Datacenter and AI Group (DCAI) is also active in Israel, although with a more limited presence. Among other things through AI chip company Habana Labs and the communication chips for datacenters (IPU), which has about 450 employees in Israel.
Intel has cut many projects, including a cooling lab 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, and sold its datacenter design unit. Layoffs on this scale are unprecedented. After offering voluntary retirement plans to its employees, it began laying off a few thousand employees 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% pay cut with a 5% pay cut for senior managers.
Intel has not significantly increased its workforce of about 12,000 employees in Israel for several years. In addition, Intel's advanced driving assistance systems (ADAS) company Mobileye Global Inc. (Nasdaq: MBLY) has 2,000 employees, but it is now 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. Intel'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. In other words, Intel continued to grow even last year when its internal crisis intensified.
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Intel declined to provide details about the planned layoffs but said, "Intel is working to accelerate its strategy while navigating a challenging macro-economic environment. We are focused on identifying cost reductions and efficiency gains through multiple initiatives, including some business and function-specific workforce reductions in areas across the company. We continue to invest in areas core to our business, including our US-based manufacturing operations, to ensure we are well-positioned for long-term growth."
Published by Globes, Israel business news - en.globes.co.il - on May 14, 2023.
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