Intel cuts some workers’ pay to fund its future
Still plans a ‘competitive dividend’ for investors
Intel’s foul financials have flowed into senior workers’ pay packets, which will reportedly be lightened by at least five percent.
Semiconductor analyst Dylan Patel wrote that Chipzilla staff have informed him: “All employees below Principal Engineer … will get a 5 percent cut, 10 percent cuts will be instituted for VPs, and the executive leadership team will take a 15 percent cut, with CEO Pat Gelsinger taking a 25 percent cut.”
Patel’s sources added that quarterly bonuses won’t be paid, annual bonuses have been paused, and pension fund matched payments have been halved.
“Merit-based raises are suspended,” he added.
This is all after the x86 giant begged the US government for billions of dollars in subsidies to build more fabs and certainly not to pay out dividends to shareholders.
Intel confirmed the cuts to Reuters, which added that the pay cuts only impact mid-level employees and execs.
Bloomberg also confirmed the pay cuts, and carried an Intel comment to the effect that: “These changes are designed to impact our executive population more significantly and will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy.”
Intel last week posted horrid results for Q4 2022, with $700 million in losses and a 32 percent revenue plunge.
- After less than half a year, Intel quietly kills RISC-V dev environment
- Intel inside a world of pain as revenue plunges by a third
- Intel chairman exits just ahead of next financial report
- Intel kills $700M liquid cooling lab amid chip slump
Investors were nonetheless paid a dividend and on its earnings call chief financial officer Dave Zinsner said the chipmaker is “committed to maintaining a competitive dividend.”
Meaning investors will get their share, even as workers’ pay packets lighten … and depreciate in value given that inflation is over six percent in most of the places Intel operates.
Job cuts are also in the works at Intel.
Patel wrote that the salary cuts kick in at too low a level and will likely lead to employee disengagement. He added his opinion that Intel may be in an irreversible decline, with even the massive subsidies offered it by the US government too little to help it address structural issues.
Chipzilla’s chief rival AMD certainly smells blood in the water: its CEO Lisa Su today said she believes her company can start picking off Intel customers, a remark made as she reported increased revenues (and a profit squeeze) in marked contrast to Intel’s revenue slump.
Intel’s now less-well-paid workers will be hoping that an expected economic rebound sees PC buyers return to stores in late 2023, and that server buyers start to deploy workloads that need the very expensive fourth-gen Xeon Scalable processors, as both would improve Intel’s fortunes. But other challenges remain: big clouds are emphasising homebrew Arm-powered CPUs, China is going in a similar direction, and Intel is no certainty to dominate emerging markets like edge computing. ®