Intel's layoffs vs Samsung's labor disputes: shaping future semiconductor competition
Daniel Chiang, Taipei; Joseph Chen, DIGITIMES AsiaMonday 19 August 2024
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Credit: DIGITIMES
Intel's underwhelming second-quarter 2024 financial results have prompted the company to announce plans to cut 15% of its workforce, approximately 15,000 employees, aiming to save US$10 billion by 2025. This decisive move contrasts sharply with the ongoing labor strikes at Samsung Electronics' semiconductor division, raising questions about how these differing labor-management approaches might affect future competition in the foundry industry.
Intel's CEO, Pat Gelsinger, explained in an internal memo that the restructuring was necessary due to slower-than-expected revenue growth and the company's inability to fully capitalize on trends like artificial intelligence (AI). The company faces a high-cost, low-margin structure, with financial conditions expected to become even more challenging in the latter half of 2024.
After launching its "IDM 2.0" initiative, which focuses on both producing its own products and enhancing advanced foundry capabilities, Intel has seen limited success. Foundry revenues have not increased, and losses have continued to grow.
In the second quarter of 2024, Intel's foundry revenue decreased by US$100 million quarter-over-quarter, with losses increasing by US$300 million. Similarly, Intel's Data Center and AI division remained stagnant at US$3 billion, with operating income down by US$200 million.
When asked about the timing of the restructuring, Gelsinger pointed out that while Intel's 2020 revenue was nearly US$24 billion higher than in 2023, the company's workforce had grown by over 10% during the same period. Faced with a high-cost, low-reward scenario, Intel decided that layoffs were the necessary course of action.
