After announcing it would be cutting 15% of its global workforce back in August, Intel Corporation uncertainty has loomed in the Folsom community in regards to how the mass reductions of 17,500 employees nationwide would affect the local campus. This week, the details of the first round of new layoffs across the regions, including the Folsom facility were released.
Some 1,300 employees will be laid off in Oregon in the newest reductions, in California, 319 Intel employees will be cut. At this time, 272 of those positions will be eliminated at the Folsom facility while another 47 employees will be permanently laid off at in San Jose. The company also has filed notices that 385 layoffs have taken place, or will be completed at its facility in Chandler, Arizona.
The local layoffs affecting the Folsom facility are classified as “involuntary layoffs,” and are expected to being Nov. 15. The company has already issued 60-day notices to the employees affected. Employees affected have reportedly received a 60-day notice prior to their separation date, or a four-week notice of termination that includes nine-weeks of severance pay “in lieu of further notice.” Over the last two months, the company has also reportedly offered the options of “voluntary,” reductions to some employees. The amount of employees that have take those has not been disclosed.
At this time, Intel has not expanded on details of the new round of layoffs, or shared any additional details of future layoffs beyond those of the Nov. 15 date. Earlier this year, currently Intel CEO Pat Gelsinger emphasized the necessity of cuts in an email to all employees.
“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate. Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.”
In his email, Gelsinger acknowledged the difficulty of the decisions. “This is painful news for me to share. I know it will be even more difficult for you to read. This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history,” he wrote. He outlined key priorities for Intel’s turnaround strategy, including reducing operational costs, simplifying the company’s portfolio, eliminating complexity, and reducing capital and other costs. The company also plans to suspend its stock dividend to prioritize investments in the business and drive more sustained profitability.
Intel’s financial challenges have been mounting. The company reported a first-quarter loss of $2.77 billion in 2023, the largest in its history, compared to a first-quarter profit of over $8 billion just a year earlier. The company’s stock has plummeted more than 40% this year, driven by its lagging position in the AI chip market and increased competition. For the third quarter of 2024, Intel expects revenue between $12.5 billion and $13.5 billion, significantly below analysts’ average estimate of $14.35 billion.
The company also forecast an adjusted gross margin of 38%, falling short of market expectations of 45.7%. These figures underscore the financial difficulties Intel faces as it attempts to regain its footing in the competitive semiconductor industry. Despite these challenges, Intel is continuing to invest in key areas, including a $10.5 million expansion at its Folsom campus for data center infrastructure. This investment aims to support the development and testing of prototype chips.
As the news of the future layoffs broke back in August, some of which are now taking place, officials from the City of Folsom and Choose Folsom, which is the Folsom Chamber of Commerce, issued a joint statement sharing their support for the local workforce that could be affected in the cuts as they take place. Intel is the largest employer in the City of Folsom.
“We at the City of Folsom and Choose Folsom recognize the potential impact this news may have on our community. While the specific details concerning the number of layoffs affecting Folsom remain uncertain, we extend our deepest sympathies to all those impacted by this decision,” read the statement shared with Folsom Times from City of Folsom Communications Director Christine Brainerd.
“The City of Folsom and Choose Folsom are committed to supporting our local workforce during this challenging time. We are confident in our community’s resilience and ability to adapt to changes in the industry,” the statement continues. “As we navigate through this period, we look toward the future with optimism. We believe in the strength and diversification of the tech industry in Folsom, and we are dedicated to fostering an environment that continues to attract and retain a diverse range of tech enterprises.”
Intel, founded in 1968 and headquartered in Santa Clara, is a global leader in semiconductor technology, particularly known for its computer processors. The company has faced increased competition from rivals such as Taiwan Semiconductor Manufacturing Co. (TSMC), AMD, and Nvidia, which have steadily chipped away at Intel’s market share in various sectors. Intel’s Folsom campus, covering 236 acres and housing over 5,000 employees, is a major hub for the company’s office, research, development, and support activities. Despite its size and significance, the Folsom campus has not been immune to Intel’s financial difficulties.
Prior to this new round of cuts, over the past year, Intel made 549 job cuts at the Folsom campus, followed by an additional 235 layoffs, bringing the total to 784 for the year. These layoffs are part of a broader trend within the company. In December 2023, Intel also announced a new round of 311 layoffs at two of its California campuses, including Folsom, bringing the total for the state to 1,700.
Intel’s attempts to cut costs are comprehensive. The company cited its need to reduce operating expenses and capital expenditure by more than $10 billion by 2025, a move it believes is necessary to navigate the competitive landscape. Intel also announced plans to slash capital expenses by 17% in 2025 year-on-year, to $21.5 billion, focusing on capital efficiency and more normalized spending levels.
As Intel moves forward with these significant changes, the City of Folsom is committed to supporting its workforce. The full impact of Intel’s layoffs on Folsom remains to be seen, but should it be significant, the community is prepared to adapt through challenging times, concludes the previously released statement.
“Our focus remains on creating opportunities, encouraging innovation, and ensuring that Folsom remains a hub for technological advancement,” concluded the statement from the city. “We will work collaboratively with local businesses, educational institutions, and community leaders to support affected individuals and drive economic growth.”
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