Intel cuts some workers’ pay to fund its future 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 …
Article» 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.
Well done Intel for such a progressive move when the need to cut back spending is there.
It is better than wantonly laying off 10,000 jobs. That being sad, the article did say that there would be layoffs.
So a few comments here as someone who currently works there and is under these cuts.
1) When you combine pay reductions *with* ongoing layoffs the impact is extremely corrosive. Considerably more so than just layoffs, cause once those are done you tend to feel "safe". Now we still having *ongoing* layoffs combined with paycuts and no timeline for resumption of "normal" pay, no budget for even basic raises anymore, let alone merit based ones.
2) Given that the higher up you are, the more of your compensations is from stock and annual bonuses, which have largely been left alone, the 15-25% reduction is suddenly a lot less
3) Whats very deceptive in what Intel did is that they also cut the 401k match in half (and it was considerable) , as well as nuking the quarterly bonuses, which requires understanding a bit about how compensation at intel works. Intel has always moderately underpaid folks with its base salary and made up for it with consistent quarterly bonuses. In practice without the semi-reliable bonuses and 401k matching that 5% pay cut is actually 15-20%. Add in inflation and for some folks its actually a 25% cut compared to this time last year.
You say that, but those at the top certainly have the ability to absorb higher cuts. They might have to ditch Lobster off the menu and replace it with some lesser crayfish, but they'll still be putting food on the table. Those at the bottom are the ones that will struggle with even a 5% shaving...
Absolutely, this is similar to the furlough, it looked nice on paper but for a lot of people the pay reduction was too much.
They did the paycuts at my last job as well and had "redundancies" too (to get away with some they'd make the most of the meaningless job titles we had). I was in that 5% band and even then furloughed but couldn't care less since I didn't have any dependents on me or bad debt etc.. So just spent most of the time looking for the right job and enjoying the empty roads on my bike, while the CEO would've still be paid quite literally 7 times as much as me
The share price is down ~42% in the last year and ~39% over 5 years, so preserved doesn't seem accurate. Shareholders are important stakeholders in the survival of a public company. Having said all that, a dividend cut with that money going into R&D might be a sensible strategic move for Intel. I'm not a shareholder, but it's the sort of thing I would want to see if I were.
(Agree it's good to see the top leadership taking the most significant pay cuts. )
I don't mean to break it to you harshly.... But the Shareholders* own the company, not the Employees. They have invested money with the expectation of receiving a return on that investment. They have not purchased shares to be part of a philanthropic jobs program.
Downvote this for stating the truth, but it doesn't change the reality of the system.
* Shareholders = People like us who have company retirement plans in 401Ks & IRAs, some of which hold blue chip stocks....such as Intel.
If you look at the Intel & TSMC roadmaps then Intel are in trouble for the next 5 years at least.
Intel has been used to having a process advantage since forever. They've lost it, and can't retain it. By the time "Intel 3" which is supposed to counter TSMC's 3nm process is available in any quantity then TSMC is going to be rolling out their 2nm process. And Intel 3 is going to be equivalent to TSMC's 3nm; not 3nmE which will have then been in volume production for a year and a half at that point.
TSMC has a track record of making conservative guesses on their roadmap and delivering early for their customers; Intel has a track record of over promising and delivering late.
Here's a prediction; Intel will end up buying capacity from TSMC within the next and getting them to fab chip designs and will offload their older internal fabs. Logically that will eliminate the problem of using a previous generation fabbing technology and allow competing on an even playing field. However it'll introduce Intel to a new problem; that of having to compete on design merits; something which Intel has struggled to do against AMD since the AMD 386 turned out the same performance as the Intel 486 chip at a fraction of the price.
While terrible for Intel, it's very good for anybody buying computers (even if you only buy Intel) as your hardware will be faster, cheaper and consume less power than it would otherwise do.
To extend this idea, it's interesting to consider that the "intel 14nm++++++++++++" running gag was funny at the time, but we are now really seeing its effects. One suspects that if heavy machinery hadn't been such a disaster for AMD, Intel might actually be in better shape today since they would have felt the pressure to stop competing on process advantage earlier.
Dividends are supposed to come from profits. To earn profits, a company must produce a wanted product or service. Without employees and well motivated ones at that, they will have a hard time earning those profits. Deleting merit based raises sounds a bit suspicious. Will they also curtail "diversity" raises for those that identify as non-mainstream, non-binary, gender fluid, etc, ad nauseum?
Ever shifting headcounts means lots of institutional knowledge walking out of the door and constantly needing to train new people and get them used to the company culture. It can make more sense to look for savings by shifting workplaces (fabs excluded) to areas with lower costs. A company that gets known for surprise staff reductions will have a much harder time attracting talent that will stay with the company long term. When I was younger, moving jobs was no big deal. As I got older and had to worry about spouse and family, stability became very important. To buy a house means needing to stay put for a certain number of years just to break even on costs over renting and owning a home is the best way to start building wealth. If the company I'm looking at working for has a reputation for purges or stagnant wages, I'll apply elsewhere.
...is we don't have runaway inflation right now. Prices for everything are not up 10-20%, so this pay cut will be easy to absorb. Taxes are going down too which help out as well. It should be net-net even out for all involved.
"Downward class migration"
I wonder how Oregon's "Corporate Activity Tax" is playing out for them right now (tax on gross sales, not on net profit). Intel is Oregon's largest employer and the state has been taking 0.57% off the top line revenue for two years. That adds up pretty big for a multi-billion dollar company.
For every person Intel employs, it is estimated that job supports 3-4 additional jobs in the area. Inflation up + wages down = a non-trivial hit for the state. But hey, the state gets paid first, so I am sure it is all good.
Intel has and has alwasy been a lousy CPU designer and maker.
The CPU desings and ISAs are a mess.
The procution and test aer hit too - they produce so much bug riddled junks that its a joke (I worked there).
The only thing that ahs allowed Intel lbundering incomeptnence is the ability to throw large dollops at monet at eerything - fabs, tests, chip designers, etc etc.
Intel will die a death without the free cash to throw at its fuckups.
Dropping dividends would have more than paid for all these pay cuts, but that would hit the stock price - which would hit the options of those at the top and that's where they make their real money. A 15% or 25% cut in salary is nothing when most of your income is via options.
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