Intel Begins Layoffs In California, ‘Voluntary Unpaid Leave’ Program

The job cuts are likely just the opening salvo as the Santa Clara-based semiconductor giant looks to cut up to $10 billion by 2025.

Intel has started its expected layoffs close to home with cuts to its California operations totaling 201 people as part of a broader cost cutting effort, according to letters filed with the state.

The layoffs are scheduled to begin Jan. 31. According to the Worker Adjustment and Retraining Notifications obtained by CRN, 111 employees will be laid off at the Folsom, Calif. location while 90 employees will be let go from Santa Clara, Calif., where the company is headquartered.

According to Oregon Live, the company is also offering unpaid leave to thousands of factory workers worldwide as part of the cost cutting efforts.

[RELATED STORY: Intel CEO Pat Gelsinger On Potential Layoffs, The ‘Unpredictable’ Economy And Consolidation In The Chip Market]

“Retaining our manufacturing talent is a key element of positioning Intel for long-term growth,” the company told The Oregonian in a written statement. “Voluntary time off programs allow us an opportunity to reduce short term costs and offer employees attractive time off options.”

CRN reached out to Intel for further comment.

The Financial Times last week reported that thousands of Intel workers in Ireland were offered three months of unpaid leave.

While Intel has not specified which positions would be cut or how many workers would be affected overall, the company in late October signaled to analysts and investors that it would look to cut costs by $3 billion in 2023 and up to $10 billion by 2025. On LinkedIn, several affected employees updated their profiles to “open to work” statuses and commented about being laid off – those positions included a senior manager in the artificial intelligence business unit, an executive assistant, and a manager-level software engineer.

Mike Turicchi, vice president of Gainesville, Va.-based NCS Technologies, worries about the potential impact Intel’s latest layoffs will have on channel relationships.

“It’s unfortunate to see another reduction in the sales force after the massive layoffs a few years ago when all of the experienced and seasoned veterans were laid off or encouraged to take early retirements,” Turicchi told CRN. “That leaves channel customers like us in a position where we don’t have the support for competitive, differentiating information from Intel. It seems counterproductive when AMD, Apple and ARM solutions have made such gains in market share, performance, and product availability over the last couple of years. I’m disappointed.”

Intel in October reported a 59 percent year-over-year decline in net income to $2.4 billion and a 15 percent year-over-year drop in sales to 15.3 billion for its third fiscal quarter ended Oct. 1. “The macroeconomic [situation is] unpredictable, a tough market,” Gelsinger said. “It’s just hard to see any points of good news on the horizon… So against that backdrop we’re still looking to have economic headwinds as we go into next year.”

Gelsinger said the chip giant faces tough times ahead and faces “difficult” cost cutting decisions that include a “right sizing” plan to cut $3 billion in 2023 and as much as $10 billion in costs by 2025. “Inclusive in our efforts will be steps to optimize our headcount,” Gelsinger told analysts during a call. “These are difficult decisions affecting our loyal Intel family, but we need to balance increased investment in areas like leadership and technology development, product and capacity in Ohio and Germany with efficiency measures elsewhere as we drive to have best-in-class structures.

The California layoffs are not the only ones affecting workers. Other states are being impacted as well. Shashi Jain, a senior innovation manager at Intel’s Portland, Oregon office, wrote on LinkedIn that his position would be cut. “I was part of the Intel layoffs recently announced,” Jain wrote. “Though I have some time before I turn in my badge, I am certainly at peace with the process… I’ve had a pretty good run at Intel…”