Intel announced its plans to lay off workers, mostly at its Folsom campus. A WARN notice has been sent out by Intel and is set for the removal of 89 people, according to California Employment Development Department records.
Intel has decided in response to slower PC demand and rising competition from AMD and expects those affected by it will receive severance pay, such as weeks of vacation or sabbatical time.
Why Intel is laying off workers
Intel (link external) is feeling the strain as the world transitions away from PCs toward mobile devices and the Internet of Things, and announced on Friday it will lay off 12,000 employees over two months, representing approximately 11 percent of its workforce. By making these cuts, Intel expects to save $750 million this year and up to $1.4 billion by mid-2017 through cost-cutting measures.
Intel has come under increasing pressure from investors to reduce its massive debt load and limit spending on new plants. Furthermore, it faces stiff competition from ARM chips designed for mobile devices and has had difficulty competing in the data center market with its more affordable Xeon processors.
On October 27, during a quarterly earnings call, CEO Pat Gelsinger revealed the company was taking “aggressive actions” to cut $3 billion in expenses. While some savings might come from people costs, he did not specify which departments might be affected – according to Bloomberg, sales and marketing departments may have been among those targeted.
Intel employees do not seem worried about mass layoffs, according to a Glassdoor survey conducted in February 2019. Most feel secure in their current jobs – 20% even indicated a willingness to accept pay cuts to keep working for Intel!
Intel has not given many details of its plan to reduce employment numbers, but sources tell The Register that Intel plans on cutting division-by-division. Analyst Dylan Patel from tech research firm SemiAnalysis tweeted over the weekend that Intel was asking its Client Computing Group data center and AI groups for volunteers willing to leave before involuntary layoffs took effect.
Intel did not respond to The Verge’s request for comment; however, during an interview with Reuters earlier this month, Gelsinger indicated that its manufacturing plant and fabrication operations could provide opportunities to cut costs. Intel currently employs approximately 120,000 worldwide.
What to expect from a layoff
Intel recently made public their plans to lay off hundreds of employees at both Folsom and Santa Clara locations, according to KCRA 3. They sent notices out via local government agencies as well as posting the news online, according to California’s Worker Adjustment and Retraining Notification Act (WARN), which requires employers to provide 60-day advance notification prior to mass layoffs. Intel states they will continue seeking opportunities for affected staff within Intel.
Intel has announced layoffs as part of a cost-cutting effort at the company, which has been hit hard by slowing microprocessor demand in PCs and data centers as well as competition from Taiwan Semiconductor Manufacturing Co. and Nvidia chip rivals. CEO Pat Gelsinger pledged to restore Intel to its former status of leading supplier by increasing manufacturing capacity.
But Intel’s restructuring is a setback for employees who depended on long-term contracts as an assurance of employment security, while for Silicon Valley itself, it could signal that an economic downturn is imminent.
Intel must decide whether its recent restructuring can successfully restore demand for its products or if its stock will fall due to announced layoffs – a trend often seen when large tech firms announce layoffs. Historically speaking, stock prices typically drop when large technology companies tell releases.
Today’s announcement sent the company’s shares tumbling by 2%; this latest in a string of layoffs by tech firms has felt the impact of an economic downturn and rising interest rates, including those at Microsoft, Amazon, and Meta Platforms — the parent company for Twitter and Facebook.
How to prepare for a layoff
Intel is widely expected to shed staff this year despite an otherwise strong economy in an attempt to respond to weak PC demand and rising inflation by cutting jobs in sales and marketing departments. According to reports, sales personnel could see their employment reduced.
No doubt the tech industry is facing challenging times these days; many companies like Dell, IBM, and Microsoft have laid off employees this year alone. But it is important to remember that layoffs don’t have to mean complete career derailment; they may instead provide an opportunity for growth in other areas. Be prepared for unexpected financial situations by following these simple steps that will allow you to prepare for possible job loss while taking control of your finances.
As part of your layoff preparations, you must understand what will comprise your separation package. Severance pay is usually calculated using a formula consisting of fixed weeks plus a percentage of years served (for instance, 30 weeks for 20 years of service). Furthermore, this package usually covers any vacation/sabbatical accruals as well as prorated annual and quarterly bonuses that you have accrued during employment.
If you are uncertain of your separation package, reaching out to HR for more information can help. They should be able to give an estimate of severance pay as well as any benefits that you might be eligible for, such as health care coverage, stock options, or pension plan contributions.
As for how to respond, knowing how to react when faced with the possibility of layoff is also paramount. Stay calm and professional without succumbing to fear. Furthermore, being open about your situation with friends and family members should not be seen as something shameful or awkward.
The future of the Tech Industry is Uncertain, But with some preparation, you can be ready for whatever comes your way in terms of layoffs or recession. Make sure your finances are organized with Monarch Money so you’ll always be prepared no matter what.
What to do after a layoff
As the tech industry struggles, Intel is cutting thousands of jobs over the coming year to reduce costs and meet decreasing PC demand. Intel is signaling its uncertainty by cutting thousands of positions at once due to slow economic growth and declining laptop and desktop sales. This sign of trouble in the chip industry was furthered by an unexpected economic recession, which further reduced demand.
Intel is currently grappling with increased competition from Taiwan Semiconductor Manufacturing Co. and AMD, who are chipping away at its market share across key business segments. Intel has responded by cutting its workforce, as well as scaling back the projects it launches, focusing on areas like AI and cloud computing instead.
Intel has already laid off thousands of workers this year and is expected to announce additional cuts soon. Furthermore, bonuses and other forms of employee compensation will likely be reduced; all this comes just months after Intel reported its first quarterly loss since 1997, with revenue down 36% and net loss coming in at $2.8 billion.
Intel employees who are being laid off may receive a severance package that includes pay, medical benefits, and stock options. However, the specific terms can differ dramatically to make an informed decision on accepting or not accepting it.
If you decide to accept a severance package, you must understand its tax repercussions. Severance payments are treated as ordinary income in the year they are distributed and subject to federal and state taxes. Furthermore, most packages include at least one year of COBRA coverage, which will provide health insurance until you find another job.
After being laid off, it can be disheartening and disorienting – yet don’t let this setback discourage you from finding new opportunities. Utilizing appropriate resources can help you quickly locate a job and start making money again as soon as possible.