Intel Announces Layoffs After Paying $1.5B in Q1 Dividends

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Updated 5/9/2023 9:21 PM GMT+5: Article updated to retract the inclusion of a rumor in the subheading. We are unable to confirm the magnitude of the layoffs and are unaware of any WARN notifications that would usually precede a mass layoff if any significant number was involved. Any counts given are sourced entirely from the mentioned analysts and have not been independently verified.

Chipmaker Intel Corporation has confirmed another wave of layoffs after rumors suggested that the firm was reducing budgets for its data center and client computing business divisions. Intel announced widespread pay reductions earlier this year that saw senior executives and employees miss their bonuses and take salary reductions as part of the firm’s efforts to reduce costs during a historic downturn in the semiconductor industry that has affected both chip designers and manufacturers. Now, in a statement sent to Tom’s Hardware, the Santa Clara, California technology giant has shared that it is undergoing “function-specific workforce reductions.”

Intel’s Layoffs: Function Specific Reductions And Budget Cuts Continue

Intel’s earnings report for the first quarter of 2023 was one of the worst in the company’s history. Its revenue dropped by 36% annually and the firm also posted a loss per share of four cents. These losses came as the firm ensured that its investors were happy and paid $1.5 billion in dividends out of pocket during Q1, keeping the payments nearly similar to the year ago quarter’s figures.

Rumors of layoffs at Intel surfaced last week when Dylan Patel of Semianalysis tweeted about it and shared:

Very unfortunate news, but massive layoffs at Intel coming! Intel’s Datacenter and Client computing groups are receiving ~10% budget cuts It’s up to divisions to figure out how to cut Given fixed costs, means as much as 20% layoffs in groups LTD (process node) unaffected

However, at the time, he was the only source that had mentioned the new business strategy, and so it was unclear whether the layoffs would actually take place. Now Intel itself has confirmed this, after being asked by Tom’s Hardware to comment on the rumors – although the exact magnitude of the layoffs remains unclear. It is worth noting that any significant layoffs are usually preceded by WARN regulatory fillings suggesting that – unless Intel’s lawyers missed a beat – the layoff magnitude should not be close to 20%.

The layoffs are part of the firm’s latest efforts to retake the chipmaking crown from the Taiwanese Taiwan Semiconductor Manufacturing Company (TSMC) and build more plants in America.

Intel’s statement sent to the publication reads as follows:

“Intel is working to accelerate its strategy while navigating a challenging macro-economic environment. We are focused on identifying cost reductions and efficiency gains through multiple initiatives, including some business and function-specific workforce reductions in areas across the company.

“We continue to invest in areas core to our business, including our U.S.-based manufacturing operations, to ensure we are well-positioned for long-term growth. These are difficult decisions, and we are committed to treating impacted employees with dignity and respect.”

Toms Hardware

This news follows February’s pay cuts that saw Intel suspend merit bonuses and reduce salaries by up to 25%. The largest percentage was reserved for the firm’s chief executive officer Mr. Patrick Gelsinger, and grades 7 to 11 saw a 5% pay cut – which was extended to 10% and 15% for  vice presidents and senior executives. At the same time, quarterly and annual bonuses were also suspended, and pension plan payments were cut in half.

Its troubles in the chip industry have hit Intel hard, with the firm’s latest market capitalization sitting at $129 billion – lower than its smaller rival Advanced Micro Devices, Inc. AMD is worth $145 billion on the stock market, and most analysts are hopeful that the firm will continue to gain data center market share this year – a division that might see a workforce reduction at Intel.

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