Intel, under pressure from shareholders and the market recession (whether you acknowledge that reality or not) have decided to cut pay by 5% or more corporate wide. Corporate employees from every side of the business have confirmed that the company is making drastic cuts, which are affecting its employees’ compensation and benefits. Quarterly pay bonuses, annual bonuses, a halving of 401k match from 5% to 2.5%, suspension of raises, and a cut to base salaries are all official according to internal communication. The cuts are all over, widely affecting engineering departments, with leadership seeing 10% to 15% cuts while CEO Pat Gelsinger sees losses of 25%.
These fiscal measures are causing concern among employees who just a couple of years ago must have felt like untouchables living in a gilded age but the cuts just keep cutting deeper with rampant inflation. While the company claims that these cuts are necessary to reduce its burn rate, the fact that the company’s dividend remains intact raises questions about its priorities. This decision to prioritize the dividend over employee retention is not only a cause for concern for employees but also for the long-term future of the company. The loss of bonuses, combined with base pay cuts, may cause a drop in morale. However, these pay cuts, while practically unheard of in this space, are in stark contrast to more severe measures at Microsoft and Google.
In October 2022, Intel announced a comprehensive supply chain review aimed at cutting costs. Since then, the company has taken drastic global measures, like cutting an R&D center in Israel, laying off thousands of employees, cutting its RISC-V accelerator program (which it probably needs more than anything), leaving network infrastructure verticals, and cutting new spending. The source for the story suggests that even after making these cuts, Intel will remain cashflow negative throughout 2023.
Source: Semianalysis
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