In an attempt to reduce expenses in the face of declining revenues, Intel intends to sell its 150-acre facility in Folsom, California. Additionally, the chipmaker stated that it is attempting to simplify its footprint at its Silicon Valley headquarters and is assessing the future of its 50-acre Hawthorn Farm property.
Intel said in a statement Friday that it is changing its global real estate strategy to minimize underused space and concentrate on fewer, more crowded areas. This strategy will save the business money while encouraging more face-to-face cooperation at our biggest locations.
One of Intel’s main operational centers, Folsom, which is close to Sacramento and employs over 5,000 people, is closing. It claims that it wants to use the property—which includes seven buildings and 1.6 million square feet of labs and offices—more effectively.
In a statement, Intel stated that it is looking at more economical ways to use its Folsom property, such as leasing back some of its existing space.
Businesses frequently try to get value out of their real estate holdings through sales and leasebacks, particularly when they are short on cash.
Intel is having a lot of problems. The market for Intel’s microprocessors in PCs and data centers has declined, and Taiwan Semiconductor Manufacturing Co. has surpassed it in technological leadership in computer chip manufacturing.
In the meantime, Intel has not advanced much in the trendiest area of technology, artificial intelligence. That market is dominated by Nvidia.
Since 2021, Intel’s sales have decreased by a third, and the business last quarter posted a loss of around $17 billion. However, the company stated that it is moving closer to financial stability and increased its prediction for the latter half of the year.
This October, Intel cut 15,000 positions through layoffs and buyouts as part of a $10 billion cost-cutting strategy.
Among those layoffs were 1,300 in Oregon, where Intel employed over 23,000 at the beginning of the year, and 272 in Folsom last month.
In an effort to save money, Intel is reducing its global real estate holdings. Although it hasn’t made any specific announcements, the firm told its staff that it plans to combine operations at its Santa Clara, California, headquarters.
Of Intel’s four sites in Oregon, Hawthorn Farm is the smallest. Although certain historical records show the business started functioning there in 1978, Intel claims it fully launched in 1981. Today, it houses offices and a lab dedicated to motherboard technology research. During last month’s reductions, Intel let go of 124 workers at the location.
Intel has stated that it has no imminent intentions to sell the property, although it has been urging staff to relocate to more crowded Oregon locations.
Updated information in this article suggests that Intel may have been active in Hawthorn Farm as early as 1978.
–Mike Rogoway writes on the business and technology in Oregon. You can reach him at 503-294-7699 or [email protected].
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