Intel Corp., the world’s biggest maker of semiconductors, said it will cut 12,000 jobs, or 11 percent of its workforce, retrenching as the personal-computer market heads toward a fifth year of decline.
The company said it’s shifting focus to higher-growth areas, such as chips for data center machines and connected devices. Intel also gave a second-quarter sales forecast that fell short of analysts’ estimates.
Revenue will be about $13.5 billion, the company said Tuesday in a statement. That compares with an average analyst estimate of $14.2 billion, according to data compiled by Bloomberg.
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Shipments of PCs, a market that provides Intel with almost 60 percent of its sales, fell to their lowest level in a decade in the first three months of 2016.
Intel, which had staved off the worst of the impact of the extended slide in laptop demand by taking market share from an ailing rival and dominating in server chips, is now finding that isn’t enough.
Chief executive Brian Krzanich is bringing in new executives and watching veteran Intel leaders leave as he tries to revitalize the company’s push into the mobile-chip market and jump-start PC demand.
“It’s a lot to absorb,” said Doug Freedman, an analyst at SternAgeeCRT in San Francisco.
While the job cuts will encourage investors that Intel’s management is reacting to its changing circumstances, the company could probably do more to tighten cost controls, he said.
Adding to recent reshuffles among Intel’s leadership, chief financial officer Stacy Smith will move to a new role as head of manufacturing and sales, the company said in the statement.
Intel shares, which have lagged behind other chip stocks this year, fell less than 1 percent to $31.60 at the close of trading in New York. They slipped 2.5 percent in extended trading after a halt for the earnings and layoff announcements.
The job cuts announced Tuesday will be Intel’s biggest layoffs since it reduced staffing between 2005 and 2009, when the company was responding to the global financial crisis and competition that wiped out growth. Krzanich is taking his company’s head count down from close to record levels after posting an average of less than 1 percent revenue growth over the past four years.
“With 107,000 employees, there’s always room to tighten the belt, especially with a softer global macro,” said Craig Ellis, an analyst at B Riley & Co.
Intel’s workforce has been above 105,000 since 2012, when it completed a surge up from an almost 10-year low of 79,800 in 2009, according to data compiled by Bloomberg. That period of growth includes its two largest acquisitions, McAfee in 2011 and Altera last year.
