Salaries for mid-level staff and senior management at Intel have been cut after it posted lower-than-expected sales forecast
Intel’s CEO Pat Gelsinger is to take a 25 percent pay cut, as the chip giant seeks to reduce costs in the face of a tough macroeconomic environment.
Intel on Tuesday said that it is making broad cuts” to staff and executive pay packets, Reuters reported – a week after the chip giant issued a lower-than-expected sales forecast driven by a loss of market share to rivals and a PC market downturn.
Intel has already implemented a number of other cost cutting measures that began last year. In October 2022 Intel’s planned job cuts impacted 20 percent of its workforce (mostly in sales and marketing), coupled with a slowdown in spending on new plants in an effort to save $3bn in 2023, and save as much as $10bn by 2025.
Intel’s last big wave of layoffs had occurred in 2016, when it trimmed about 12,000 jobs, or 11 percent of its total.
Then in December it was reported that 2,000 staff at Intel’s Irish operation (it has 5,000 staffers in Ireland) had been offered three months’ unpaid leave as part of cost-cutting measures.
Then late last month it was reported that Intel would more than double its California layoffs, with up to 544 employees being let go. The chip maker now reportedly plans to remove 343 employees at its Folsom campus in California, and 201 staff at its Santa Clara location.
Now Reuters has reported that mid-tier staff and executives at Intel are to take home smaller wage packets.
The reductions will range from 5 percent of base pay for mid-level employees to as much as 25 percent for Pat Gelsinger, Reuters reported.
Intel’s hourly pay for employees will not be cut, a person familiar with the matter who was not authorised to speak publicly, was quoted as saying.
Intel spokesperson Addy Burr told Reuters in a statement that the “changes are designed to impact our executive population more significantly and will help support the investments and overall workforce.”
The person familiar with Intel’s pay cuts reportedly said that in addition to 5 percent decreases for mid-level employees, vice president level employees will see 10 percent reductions and the company’s top executives other than the CEO will get 15 percent cuts.
The company has also lowered its 401(k) matching program from 5 percent to 2.5 percent and suspended merit raises and quarterly performance bonuses, the person reportedly told Reuters.
Annual performance bonuses based Intel’s overall financial performance will remain, but those bonuses have been smaller in recent years as the company has lost ground to rivals, the person reportedly added.
It is no secret that the PC market is currently in decline after several years of growth during the pandemic.
Last October analyst house IDC reported a 15 percent year on year decline in PC shipments.
As the world emerged from Covid-19 lockdowns and schools and offices reopened, people are spending less on PCs than they did during the two plus years of the pandemic.
Intel said last week that its profit margins were plunging as the PC market cools.
Gelsinger at the same time also conceded that Intel had “stumbled” and lost market share to rivals such as Advanced Micro Devices.