There are fears for jobs at Intel’s Irish business after the chip giant pledged to cut costs in an effort to weather a persistent slump in computer demand that is dragging down sales and profit and obstructing its turnaround efforts.
Announcing its third quarter earnings on Thursday, Intel said actions including headcount reductions and slower spending on new plants will result in savings of $3 billion (€3 billion) next year, with annual cuts swelling to much as $10 billion by the end of 2025.
But the impact of the global cuts on the company’s 5,000-strong workforce in Ireland is not yet known, nor is the potential impact on future hiring. A spokeswoman for the company said the cuts would be decided based on business groups rather than geographical location. the situation is expected to become clearer in the coming weeks.
Under Intel’s current investment plans, jobs in Ireland were expected to rise to about 6,500. Intel said earlier this year it would invest a further €12 billion in its Fab 34 facility between now and the end of 2023 in a move that will bring to €30 billion the total invested in Ireland since 1989.
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The State narrowly missed out on becoming home to two new large semiconductor factory sites to Magdeburg, Germany. In addition to the new German factories, Intel is also creating a new R&D and design hub in France, and announced manufacturing, foundry services and back-end production in Italy, Poland and Spain.
Chief executive Pat Gelsinger had been banking on a rapid rebound in semiconductor sales to help fund his ambitious plans to restore Intel to its former dominance in the $580 billion industry. Mr Gelsinger, who predicted three months ago that the third quarter would be the nadir for the company’s performance, instead said demand for Intel’s computer processors has fallen off even more sharply than projected and the outlook remains dour.
“The worsening macro was the story and is the story. There’s no good economic news,” Mr Gelsinger said in an interview. Predicting a bottom for the market for computer chips currently would be “too presumptive”, he said.
Third-quarter net income was $1 billion, or 25 cents a share, down from $6.8 billion, or $1.67 a share, in the same period a year ago. Revenue dropped 20 per cent to $15.3 billion. Before certain items, profit was 59 cents a share. Wall Street was looking for a profit of 33 cents on sales of $15.4 billion.
The news of potential job cuts was reported earlier in the month, with rumours of a major reduction in headcount, likely numbering in the thousands. Some divisions, including Intel’s sales and marketing group, could see cuts affecting about 20 per cent of staff, according to sources.
Intel’s last big wave of lay-offs occurred in 2016, when it trimmed about 12,000 jobs, or 11 per cent of its total. The company has made smaller cuts since then and shuttered several divisions, including its cellular modem and drone units. Like many companies in the technology industry, Intel also froze hiring earlier this year, when market conditions soured and fears of a recession grew. — Additional reporting: Bloomberg
