American manufacturer of semiconductor computer circuits Intel has revealed plans to slash employees’/executives’ wages due to the global PC market downturn.
Recall that last month following the fall in global PC shipments, it disclosed plans to cut costs by $3 billion this year through layoffs and other measures as it works to shore up the bottom line after posting a small quarterly loss last fall.
The tech company disclosed plans to slash the base pay for employees above mid-level ranks by at least 5%, effective on March 1. Also, Vice Presidents will receive a 10% cut, senior executives a 15% cut, and the CEO will get a 25% reduction in base pay.
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Meanwhile, employees who earn hourly will not see any pay cut in their wages and bonuses, but Intel plans to cut other incentives for all employees.
The company has also suspended merit raises for all employees, suspended quarterly profit-sharing bonuses and employee recognition programs, as well as a cut 401(k) retirement plan matching payments by half, to 2.5%.
Management pay is being cut at Intel, after the chipmaker predicted one of the worst quarters in its 50-years in business. CEO Pat Gelsinger will take a 25% pay cut, while the remainder of the executive leadership team will see their salaries fall 15%. In a trickle-down approach, senior management pay will drop 10%, while mid-level managers lose 5%. The company hopes the cuts will bolster its attempts to turn things around, with plans to build new plants in the U.S. and Europe, as well as winning outsourcing contracts. (LinkedIn News)
Speaking on the company’s recent changes, a spokesperson at Intel Addy Murr via a written statement, disclosed that these changes were necessitated to help support the company’s investments and overall workforce needed to accelerate transformation as well as achieve the company’s long-term strategy.
He wrote,
“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.
“We are grateful to our employees for their commitment to Intel and patience during this time as we know these changes are not easy.”
Intel reported a 32% decline in quarterly revenue last week Thursday, warning that sales will decline faster this winter. After this report the company’s stock plummeted sharply as investors reassessed its ability to deliver a long-promised turnaround.
The chip maker recorded $63 billion in sales during 2022, far below the $76 billion estimate it forecasted. While acknowledging the company’s long way to achieving financial expectations, the company’s CEO Gelsinger revealed that Intel remains on pace to deliver a succession plan for technological upgrades to its microprocessors over the next three years.
After losing its leadership in the chip-making industry to rival companies, Intel has pledged to spend billions to accelerate its research and build new cutting-edge factories.
Meanwhile, the strong macroeconomic headwinds, increasing inflation pressure, and frozen PC demand took a heavy toll on the global PC market last year.
This saw global PC shipments decline by a record 27.8 percent (year-on-year) in Q4 2022, reaching 65.2 million units, with entire 2022 shipments declining by 15 percent (Year on Year).