In a strategic move to streamline operations and recover from financial losses, Intel Corporation announced plans to sell its Folsom campus and lease back a portion of the space under new ownership. This decision, part of a broader cost-cutting strategy, comes after significant layoffs and industry challenges over the past two years.
The 150-acre campus, located at Prairie City Road and Highway 50, has been a hub of Intel’s operations since 1984. Once home to approximately 10,000 employees, the site now houses fewer than 5,000 workers across its 1.6 million square feet of office space, laboratories, and testing centers. Despite downsizing, Intel confirmed the Folsom campus will remain operational, with the sale and leaseback approach ensuring a more efficient use of space.
“We are shifting our global real estate strategy to focus on fewer, more populated locations and eliminate underutilized space,” Intel stated Friday. “This approach will foster greater in-person collaboration at our largest sites while also delivering cost savings for the company. We are exploring more cost-effective space usage options for Intel’s Folsom site, including a partial lease back of our current space.”
Intel spokesperson Addy Burr declined to comment on potential buyers but confirmed the company plans to list the property soon. The sale will allow Intel to monetize a valuable asset while retaining the facilities needed for ongoing operations. The remaining space could be leased or sold by the future owner to other businesses.
Industry pressures fuel Intel’s ongoing cost-cutting
The decision to sell the Folsom campus is the just the latest in a series of moves by Intel to address mounting financial pressures. The tech giant has faced declining revenues and increased competition in the semiconductor industry, particularly in the burgeoning artificial intelligence market.
Over the past two years, Intel’s global workforce has shrunk by 5%, with its Folsom site hit particularly hard. In 2023 alone, the company laid off 784 employees locally, reducing the campus workforce to 4,300 by year’s end. Additional layoffs announced in October will eliminate another 272 positions, effective Nov. 15.
Intel’s financial troubles are stark. After peaking at $79 billion in revenue in 2021, the company’s revenue plummeted to $63.1 billion in 2022. Losses have continued into 2023, with Intel reporting a $16.6 billion loss on $13.3 billion in revenue for the third quarter.
Photo courtesy of Choose Folsom.
“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,” was the explanation CEO Pat Gelsinger shared in a company wide email earlier this year just before the latest round of staff reductions.”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.” Gelsinger’s statement didn’t make any mention of the future sale of the property at the time.
The company has also taken steps to consolidate real estate holdings across other sites. In addition to evaluating the future of its 50-acre Hawthorn Farm property in Oregon, Intel is consolidating its operations in Silicon Valley near its Santa Clara headquarters.