Intel reportedly said Wednesday that it wouldn’t lay off workers from its Kiryat Gat facility, after the high-tech multinational announced a cut of 12,000 employees, or about 11% of its workforce.
The Intel chip fabrication plant in Kiryat Gat is a major employer for the southern city, and the announced layoffs raised concerns of a major blow to the city’s economy.
The company said that it would stand by its commitment to keep its Kiryat Gat workers on the payroll, Channel 2 reported. The microchip giant currently employs 3,000 people in Kiryat Gat and has guaranteed to add another 1,000 to its workforce there, according to the report.
The man reputed to be behind the restructuring, Venkata “Murthy” Renduchintala, has been to Israel and was “very impressed” with Intel’s operation here, according to Shlomo Gradman, chairman of the Israeli High Tech CEO Forum and one of the top Israeli experts on the chip and semiconductor industry.
Intel maintains a number of locations in Israel, including chip manufacturing plants and a research and development center.
The giant chipmaker made the announcement Tuesday as it reported lower-than-expected sales for the first quarter. This came as industry analysts say an extended slide in global PC sales is showing no signs of leveling off.
Intel, which has long been the world’s leading maker of PC chips, is now trying to expand into other types of computing.
“It’s time to make this transition,” CEO Brian Krzanich told analysts. While calling the job cuts “difficult,” he said they would help the company sharpen its focus in new areas.
The latest cuts follow an earlier reduction of about 5,000 jobs announced by Intel in 2014, and analysts say they may not be the last.
“These companies are so big that it takes time” — and sometimes multiple rounds of restructuring — to change direction, said Patrick Moorhead, a longtime industry expert at Moor Insights & Strategy.
Krzanich has been pushing Intel to change its focus from PCs to other computing segments that are growing and providing more profit. These include making microprocessors for “cloud computing” data centers, along with chips for Internet-connected gadgets, wearable devices and drones.
“We are evolving from a PC company to one that powers the cloud and billions of smart, connected computing devices,” he said in a statement.
Intel said the job cuts will include “voluntary and involuntary departures” over the coming year, some of them occurring as Intel consolidates some of its PC chip operations into fewer locations. A spokeswoman declined to say exactly which jobs or locations would be affected.
Intel has large campuses in Portland, Oregon; Chandler, Arizona; Rio Rancho, New Mexico; and Santa Clara and Folsom, California. It also has facilities in China.
Most of the affected workers will be notified in the next 60 days.
The cuts are likely to involve divisions making and selling chips for traditional desktop and laptop computers, Moorhead said. He noted Intel has signaled its plans to continue investing in chips for gaming consoles and new “two-in-one” devices that resemble tablets with detachable keyboards. Those devices are still seeing strong sales growth.
Analysts say Intel Corp., based in Santa Clara, was slow to recognize the growing popularity of smartphones and tablets. It now makes processors for those devices, but most handheld gadgets still use chips made by Qualcomm and other rivals.