Three days ago, word came out from Intel about a series of massive layoffs in the works. Today, Intel has officially revealed just how deep the cuts are going to be and they are deep. Around 11% of their global workforce of nearly 107,000 workers will be let go in either voluntary or involuntary layoffs. This means as many as 12,000 employees of Intel may soon be entering the job market.
The cuts are set to be part of the transition from being a “PC company to one that powers the cloud and billions of smart, connected computing devices”. This change comes as the PC business continues of soften and 40% of company revenue have come from the data center and Internet of Things segments. Compared to Q1 2015, Q1 2016 was slightly worse, with a 1.2% drop in gross margins though revenue was up 7%.
Platform sales volume (processors and chipsets) fell 15% but revenue was up 19% due to the higher selling prices. We can all see that with how much Skylake cost compared to Haswell. overall, the costs of restructuring will come to $1.2 billion, but Intel expects to save $750 million in 2017 and $1.4 billion every year after that. It will be interesting to see where most of the cuts land and if they will impact the fabs and R&D budgets.