Intel plans to sell its 150-acre Folsom campus in California as part of a broader cost-cutting effort. The company stated on November 22 that it is exploring options to maintain operations on the site, which houses approximately 5,000 employees, through a potential partial lease-back arrangement.
The Folsom campus has become the focal point for Intel amid wider financial challenges, which saw the company announce layoffs of about 17,500 employees globally earlier this year. Following those layoffs, 272 individuals from the Folsom site were cut in October, bringing the total job losses at the location to 784 for the calendar year. The company is not shutting down operations at Folsom; rather, it seeks to adopt more efficient use of the campus, which comprises seven buildings and 1.6 million square feet of offices and labs.
Inside Intel’s $10 billion plan to stay afloat
Intel is reassessing its real estate holdings globally as part of its initiative to streamline operations and reduce expenditures by $10 billion. The chip manufacturer aims to foster greater collaboration at larger sites while delivering substantial cost savings. “We are shifting our global real estate strategy to focus on fewer, more populated locations and eliminate underutilized space,” Intel stated.
Intel’s financial health has deteriorated in recent years. The company has struggled with competitors like Taiwan Semiconductor Manufacturing Company in chip production capabilities. Additionally, sales of Intel’s microprocessors targeting PCs and data centers have fluctuated. Reports indicate that Intel’s sales have fallen by a third since 2021, culminating in a nearly $17 billion loss reported in the last quarter.
The company’s diminishing presence in the artificial intelligence sector has further aggravated its situation, where Nvidia has emerged as a dominant player. While Intel has raised its revenue forecasts for the remaining fiscal year, the company still confronts challenges and ongoing restructuring efforts.
With the impending sale of the Folsom property, Intel continues to explore productive ways to utilize its assets, including a partial lease-back option to sustain operations. Sales and leasebacks are standard industry practices for companies to realize value from real estate, particularly in times of financial strain. The Folsom campus is a critical operational hub, making effective space utilization essential for Intel’s future.
In tandem with the Folsom campus evaluation, Intel is also considering the future of its 50-acre Hawthorn Farm property in Oregon. While it has not disclosed a timeline or specific plans for Hawthorn Farm, the company encourages employees to move to more densely occupied sites in the region.
Intel’s strategy reflects an ongoing effort to streamline operations amid significant workforce reductions across various sites. The restructuring saw the company shrink its workforce in Oregon from around 23,000 employees to a more manageable number, as evidenced by the recent layoffs. In addition to job cuts, Intel is focused on consolidating operations at its headquarters in Santa Clara, California, although details on these changes remain forthcoming.
Images credit: Intel
