Reports: Intel Lays Off 'Lower Performing Employees' to Cut Costs

Chip giant Intel (INTC) has begun laying off an undisclosed number of “lower performing” employees in a cost-cutting move tied to the company’s recently pared financial expectations and weakened Q1 performance, according to multiple reports.

The Oregonian reported the cuts were related to the chip maker’s announcement in April to cut some $300 million from its administrative and research budget. Layoffs are said to impact departments throughout the company, the report said.

Intel reportedly began sending out letters to laid off employees explaining the job cuts and benefits offered to workers losing their jobs. The Oregonian, which obtained a copy of the layoff letter, said some employees already have been notified. In an earlier internal memo to Intel managers, the vendor said it had finalized a list of affected workers on May 29.

First on Intel’s list of laid off employees reportedly are workers issued sub-par performance ratings.

“Intel has decided to reduce spending in the second half of 2015,” the letter, dated June 15, 2015, read. “As part of that effort, we have made the difficult decision to terminate your employment.”

The vendor also wrote, “As part of this process, Intel is involuntarily separating the employment of currently lower performing employees and repeat poor performers.”

According to the layoff letter viewed by The Oregonian, fired employees will receive at least two months of salary, a minimum of four months healthcare coverage and assistance finding future employment elsewhere. Intel also offered to forgive any repayment deals on signing bonuses or moving expenses.

“We wish you the best in your future career endeavors,” the letter said.

An Intel spokesperson reportedly declined comment on the letter, saying the company does not “comment on internal communications that are not intended for public consumption.”

Prior to sending out layoff letters to employees, Intel sent a memo to managers informing them of the impending cuts, The Oregonian reported.

“We need to reduce overall spending for the second half of the year,” the memo said. “Some of this will come from reductions in employment and some from other spending cuts. Employee reductions will vary by business group.”

According to The Oregonian, the internal document spelled out Intel’s plan not to “broadly communicate the program internally or externally. We are primarily communicating only to MCM (management committee members), senior leaders, people managers, affected employees, and the direct managers.”

The Oregonian previously reported that Intel was offering a voluntary buyout in its manufacturing group to trim its headcount.

Intel recorded Q1 2015 net income of $2 billion, earnings per share (EPS) of $0.41, and flat revenue of $12.8 billion, matching the lowered outlook the chip maker issued a month ago when it pared its earlier sales projections by $1 billion citing weaker than expected demand for business desktop PCs.