Intel bombshell: Chipmaker will lay off 2,400 Oregon workers

Intel’s mass layoffs amped up considerably Friday evening with word that the company plans to lay off nearly 2,400 Oregon workers — nearly five times as many as it had reported earlier in the week.

The chipmaker has been firing workers all week as new CEO Lip-Bu Tan seeks to streamline Intel’s operations and reduce spending. He’s responding to a sharp downturn in sales and technological setbacks that rendered Intel an also-ran in an industry it helped invent.

“Twenty, 30 years ago, we are really the leader,”

Tan told Intel employees earlier this week

. “Now I think the world has changed. We are not in the top 10 semiconductor companies.”

Intel notified Oregon workforce officials earlier this week of plans to lay off more than 500 workers. But a revised tally, made public by the state Friday evening, raised the total to nearly 2,392. That makes the layoff among the biggest in state history.

Across the U.S., Intel has now disclosed plans to lay off at least 3,999 workers by the middle of July at sites in Oregon, California, Arizona and Texas. The company has indicated additional layoffs could continue for several weeks.

But Oregon is Intel’s largest site anywhere. The company had 20,000 employees in Washington County at the start of the week, even after eliminating 3,000 jobs there last year through layoffs and buyouts.

For Oregon, this week’s news from Intel is staggering.

The state economy has been teetering for months

, with unemployment steadily rising to its highest levels since the pandemic.

“There is some real evidence of weakness in the state,” Oregon state economist Carl Riccadonna

told a legislative committee last month

.

Oregon’s semiconductor industry pays workers an average of $180,000 a year, according to state data. That’s $100,000 more than the average across all employers.

So this week’s layoffs will have a trickle-down effect throughout Oregon’s economy, and will also pinch state tax revenues — which are highly dependent on personal income taxes.

Intel enjoys tax breaks worth nearly $260 million a year, benefiting from a system designed to bring capital-intensive manufacturing to the state. It’s a setup that has generally worked well for Oregon’s economy over the years, but Intel’s current plight leaves the future in doubt.

Technological failings dating back nearly a decade put Intel on its heels. The company lost its leadership position in chip manufacturing technology to rival Taiwan Semiconductor Manufacturing Co., which makes chips for AMD, Nvidia, Apple and many other companies.

TSMC’s advances enabled all those companies to take advantage of its manufacturing technology and steal market share from Intel, whose sales have dropped by a third in the past three years.

Intel, meanwhile, has been shut out of the booming market for chips that train advance artificial intelligence.

“On training, I think it is too late for us,” Tan told Intel employees this week. Nvidia’s position in that market is “too strong,” he said, so Intel will have to explore adjacent AI technologies.

Under former CEO Pat Gelsinger, Intel had been laying the groundwork for a major expansion. It won $7.9 billion in federal subsidies to expand or build new factories in Oregon, Arizona, Ohio and New Mexico.

Oregon awarded Intel $115 million

to expand its D1X research factory in Hillsboro.

But with sales falling and market share shrinking, Intel’s board forced out Gelsinger and Tan has thrown the company into reverse.

Intel is still waiting for most of its federal money and it may have to pay back its Oregon grants if it doesn’t follow through with its expansion plans.

Intel workers laid off this week will generally receive 13 weeks of pay, plus an additional 1.5 weeks of pay for each year they have spent with the company. Most will also receive a year of health benefits, while some workers near retirement age will receive cash payouts instead.

In past years, Intel has announced layoffs in advance and set a target for the number of jobs it plans to eliminate. Tan is doing things very differently, allowing each business unit to meet financial targets in their own way.

The result has been a steady stream of bad news for Intel workers over the past several weeks as the company announced various cuts internally.

Intel is laying off workers at all levels of the company but the cuts may have fallen hardest on technicians, the company’s front-line factory workers. More than 500 lost their jobs this week in Oregon.

The chipmaker is laying off 1 in 5 employees in Intel Foundry, the company’s huge manufacturing and research division. That will produce many thousands of job cuts across the company.

Friday’s disclosure indicates Intel will lay off more than 1,500 at its Hillsboro manufacturing campus, Gordon Moore Park at Ronler Acres. That’s its largest Oregon site.

In addition, Intel has shut down its automotive business and is outsourcing its marketing organization to the consulting firm Accenture. Nearly every other part of Intel’s operation is making its own layoffs, too.

Intel declined to comment on Friday’s layoff tally, instead reiterating the same statement it has repeated since The Oregonian/OregonLive first reported the pending cuts:

“Removing organizational complexity and empowering our engineers will enable us to better serve the needs of our customers and strengthen our execution,” the company said. “We will treat people with care and respect as we complete this important work.”

—

Mike Rogoway

covers Oregon technology and the state economy. Reach him at

mrogoway@oregonian.com

or 503-294-7699.

Kristine de Leon contributed to this report.

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