Wall Street is abuzz over news of sweeping Intel (NASDAQ:INTC) job cuts. What do you need to know about the latest Intel layoffs?
Well, the tech giant announced this week that it will lay off about 235 employees as the latest major source of job cuts out of Silicon Valley. This will also mark the fifth round of layoffs for the chipmaker as part of its cost-cutting efforts.
Indeed, according to Intel spokesperson Addy Burr, Intel is “working to accelerate its strategy while reducing costs through multiple initiatives, including some business and function-specific workplace reductions across the company.”
Perhaps most troubling, Burr noted that there may be additional layoffs coming in the new year. As it stands, Intel consists of more than 13,000 employees throughout its California-based operations.
While five rounds of layoffs may seem excessive, it appears Intel is simply following through with its cost-cutting goal. Last year, the company set a goal of cutting $10 billion in costs by 2025 through “layoffs, reduced hours and potentially selling divisions.”
This new strategy is seemingly a response to slowing demand in the personal computer market. Indeed, third-quarter revenue slipped to $14.2 billion, down 8% from $15.3 billion in Q3 2022.
Wall Street Alarmed by Intel Layoffs
While today’s announcement shouldn’t come as too much of a shock given the company’s warnings on the matter, that hasn’t stopped Wall Street from considering the worst implications of the news.
Indeed, with recession concerns still looming ahead of the new year, Intel’s announcement has rejuvenated fears that an impending economic slowdown remains a distinct possibility.
Reasonably so, Intel isn’t the only major company to announce layoffs in 2023. Various labor strikes and cost-cutting efforts this year have cost a large number of jobs across dozens of industries and job classifications.
With interest rates still high, economists predict unemployment will likely continue to rise in 2024. The Congressional Budget Office (CBO) projects that the unemployment rate may climb to 4.4% next year. Given the current 3.9% unemployment rate, this implies millions of Americans could lose their jobs in 2024. The tech sector is also particularly sensitive to interest rates, given its highly leveraged, growth-oriented nature.
Interestingly, since news of the Intel layoffs, shares of Intel have been in the green. INTC stock is up about 2% since Monday.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
