Intel, one of the world’s leading semiconductor companies, has recently made headlines due to its significant workforce reductions. The company announced in August 2024 that it would be laying off 17,000 employees, representing a considerable 15% of its global workforce. The decision has come amid a series of financial and operational challenges faced by Intel in an intensely competitive market.
This layoff initiative follows Intel’s prior cost-cutting strategies, including salary reductions and benefit adjustments. Many employees, particularly in regions like the United States and Israel, are now feeling the impact as Intel pushes forward with restructuring plans to streamline operations and enhance cost efficiency.
Intel $INTC is set to lay off close to another 17,000 employees after laying off 20,000 earlier in the year
The stock is up 12% on the earnings news. pic.twitter.com/sIxRczjdlL
— unusual_whales (@unusual_whales) October 31, 2024
The layoffs are part of Intel’s larger turnaround strategy aimed at stabilising the company financially and allowing it to compete more effectively with rivals like Nvidia and AMD. Intel CEO Pat Gelsinger, who rejoined the company in 2021, had initially presented an ambitious roadmap for the company’s future. His strategy included measures to make Intel a stronger competitor in the semiconductor market, yet the economic environment has pressured the company into drastic actions.
Although Gelsinger had previously taken a 25% pay cut to demonstrate solidarity with employees, these cost-cutting efforts were not enough to prevent layoffs. Now, the company faces the challenge of managing employee morale while trying to achieve the financial goals necessary for long-term success.
Intel’s recent moves have been met with mixed reactions from employees and industry analysts alike. The initial rounds of layoffs began in late August, with the first wave primarily affecting employees in voluntary separation agreements. In addition to layoffs, Intel has been reducing employee perks and benefits, including stock bonuses, internet reimbursement, and certain workplace amenities.
This has led to growing discontent among Intel’s workforce. Many of these employees were already affected by earlier salary reductions and cuts to various benefits, including a once-popular sabbatical program. The disappointment among staff was palpable, especially as some had hoped for a financial turnaround with Gelsinger’s leadership.
A particularly contentious issue has been the matter of promised “thank you” bonuses in the form of restricted stock units (RSUs) granted in December 2023. Many employees saw these as compensation for the pay cuts they had accepted earlier. However, Intel initially announced that unvested RSUs would be forfeited if employees left before the vesting period, causing frustration among those laid off or taking voluntary buyouts.
The outcry from employees prompted Intel to amend its policy, allowing these departing employees to receive a cash equivalent instead of forfeiting their bonuses entirely. This adjustment helped alleviate some of the anger but did not entirely ease the disappointment among affected staff.
In addition to financial compensation, Intel has reduced various other benefits that had previously been part of its appeal as an employer. For instance, the company scaled back its real estate holdings, closing some offices and consolidating others. In certain offices, employees lost amenities like free fruits, drinks, and even the company gym’s personal training services.
These adjustments, viewed as “petty” by some employees, underscored the extent of Intel’s cost-saving measures. The company also suspended its corporate shuttle service, which once provided convenient travel between key Intel offices. In Oregon, employees saw their workspaces consolidated and air conditioning reduced on certain floors as part of energy-saving efforts.
Intel’s layoffs and benefit reductions have also affected long-standing cultural traditions. Many employees had looked forward to retirement parties, which are now less feasible under current budget restrictions. Intel management suggested low-cost alternatives such as informal gatherings, and employees were encouraged to avoid terms like “celebration” when marking retirement events. These changes, while seemingly minor, reflect the evolving corporate atmosphere and hint at deeper transformations within Intel.
The job market realities in the tech industry have driven some Intel employees, especially those affected by layoffs, to seek opportunities with competitor companies. Nvidia, which has become a major player in the AI sector, has been actively hiring Intel’s former staff, particularly in Israel, where Nvidia’s expansion efforts have gained momentum.
Reports indicate that around 100 former Intel employees in Israel have joined Nvidia in 2024 alone, with many others moving to other tech giants such as Apple, Amazon, and Mobileye. Nvidia’s compensation packages are widely seen as more attractive than Intel’s, a factor that has likely motivated many to make the switch.
Intel’s restructuring efforts and layoffs may ultimately position the company to emerge more robust in the long term, but the process has come with significant challenges. With falling stock values, Intel’s recent struggles highlight the volatility of the tech industry and the balancing act required to maintain competitiveness while managing employee morale.
