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It's not Google's 12,000, but Intel plans to prune California headcount by 544

$20b investment in Ohio semiconductor fabs is all go, though

Intel looks set to shed over 500 jobs in California following last year's warnings that layoffs were in the pipeline.

Late last week filed California Worker Adjustment and Retraining Notification (WARN) documents informing the state of plans to reduce 544 jobs in Santa Clara and Folsom. The cuts are understood to make up 201 jobs at its headquarters in Santa Clara, while the Folsom research and development campus will see 176 layoffs this month and another 167 planned for March.

Intel announced last October that it intended to lay off a "meaningful number" of employees and prune the company's product portfolio as part of spending cutbacks in the face of worsening economic conditions; the chipmaking giant saw revenue fall by nearly 20 percent during 2022, according to recent figures from Gartner.

In response, Intel is seeking to slash $3 billion from its annual budget starting this year, and between $8 billion and $10 billion by 2025.

However, the company is believed to have more than 120,000 employees globally, so these 544 layoffs in the Golden State are clearly a tiny fraction of the total workforce. Further redundancies and other levers are expected to be pulled to help Intel lower its operating expenses.

As we reported last week, Intel has already canceled plans for a $200 million development center due to be constructed in Haifa, Israel, citing cost reductions as the reason.

In December, it was revealed that Intel was taking a different approach in Ireland, offering staff at its Leixlip manufacturing plant in County Kildare the opportunity to take three months' voluntary unpaid leave from working at the facility.

However, Intel still has to invest in new production lines to ensure that it has enough capacity in the right manufacturing nodes to be able to address market requirements in future.

At the World Economic Forum in Davos, CEO Pat Gelsinger told reporters that while the chip industry was entering a downcycle, it was important to continue investment to ensure that Intel would be well placed to take advantage once the economic situation picks up again.

For this reason, the company confirmed on Friday that it will plow an initial investment of more than $20 billion into the construction of two leading-edge chip fabrication facilities in the delightfully named Licking County in Ohio.

However, Intel had already reiterated its commitment to the Ohio fabs in November last year, saying that it would continue building manufacturing capacity despite a shrinking economy because it was important to diversify supply chains and have capacity for when it expects semiconductor demand to rebound.

The company also announced it was "committing $20 billion to build semiconductor plants in Ohio" this time last year, saying it would provide 7,000 construction jobs over the course of the build and the creation of 3,000 full-time roles at the facility itself. Intel is using funds from the CHIPS Act to help subsidize these fab expansion efforts. ®

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