Intel Under Fire for Job Cuts While Seeking $20B US Chip Subsidy
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Intel Faces Scrutiny Over Job Cuts While Competing for $20B US Chip Subsidy - Intel (NASDAQ:INTC)
Intel's downsizing plans under fire amid massive U.S. subsidy aimed at boosting manufacturing jobs Intel Corp INTC drew the Senator's attention for its record downsizing plans despite being a contender for $20 billion under the U.S. Chips Act. The U.S. subsidy clarified that it mainly aimed to create over 10,000 manufacturing jobs and 20,000 construction jobs for projects in Arizona, New Mexico, Ohio, and Oregon. The U.S. conceived the strategy to reduce its dependence on its Asian counterparts, such as China, for semiconductor technology. Therefore, Republican Senator Rick Scott questioned how many Intel U.S. employees would lose their jobs and how this would impact Intel's planned semiconductor manufacturing investments, Reuters reports. Last week, Intel disclosed Lip-Bu Tan's departure from the board after close to two years on the mergers and acquisitions committee. The departure followed Intel's dismal second-quarter print. The company clocked a topline decline of 0.9%, trailing the analyst consensus of $12.94 billion. It also disclosed a $10 billion cost-reduction plan, including plans to slash headcount by over 15%. In contrast, Nvidia Corp NVDA stands out with chief Jensen Huang's strategy of retaining employees by rewarding them handsomely and making up for the demanding work environment. Intel targets shipping chips for over 100 million artificial intelligence personal computers by 2025, including over 40 million in 2024. Intel stock plunged 43% in the last 12 months as the AI shift affected its PC and data center segments. Meanwhile, Nvidia gained 158% in the previous 12 months thanks to the AI frenzy. Price Action: INTC stock traded higher by 0.25% at $19.66 premarket at last check on Thursday. Image via Shutterstock Market News and Data brought to you by Benzinga APIs
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US senator to Intel CEO on 15,000 job cuts: "What is Intel trying to achieve with..." - Times of India
A US senator has reportedly demanded answers from Intel's CEO Pat Gelsinger about the company's plan to lay off over 15,000 employees, despite receiving nearly $20 billion in government subsidies for chip production. The senator is seeking clarity on the number of US jobs impacted and whether the cuts will affect Intel's planned investments. "What is Intel trying to achieve with these job cuts, and why have billions of U.S.taxpayer dollars in investments not been sufficient support to avert the need for lay-offs?" Republican Senator Rick Scott asked in a letter to Gelsinger, as per news agency Reuters. Scott questioned if the Commerce Department's planned awards had failed "to include real metrics that would protect taxpayer dollars from going to companies that could not meet high standards for US manufacturing and job creation." Intel awarded up to $8.5 billion in CHIPS Act grants In March this year, the White House said Intel has been awarded up to $8.5 billion in CHIPS Act funding as a part of efforts to ramp up semiconductor manufacturing in the US. Intel can also receive an additional $11 billion in loans as well as access to a 25% investment tax credit. The chips award, however, has not been finalised. The US Commerce Department reportedly said in May the funding will support the creation of more than 10,000 manufacturing jobs and nearly 20,000 construction jobs for projects in Arizona, New Mexico, Ohio and Oregon. Intel said this month it will cut costs by $10 billion in 2025 and as a part of this, it will reduce its workforce by more than 15%. Intel will reduce its R&D and marketing spend by billions each year through 2026 and it will restructure to "stop non-essential work". The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.
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Intel faces criticism from US Senator Ron Wyden over planned job cuts while simultaneously pursuing a $20 billion government subsidy. The tech giant's strategy raises questions about its commitment to American workers and the use of taxpayer funds.
Intel's Job Cuts Spark Controversy
Intel, the American multinational technology company, has found itself at the center of a heated debate over its plans to cut approximately 15,000 jobs while simultaneously seeking a $20 billion subsidy from the US government. This move has drawn sharp criticism from US Senator Ron Wyden, who has raised concerns about the company's priorities and its commitment to American workers 1.
Senator Wyden's Inquiry
In a letter addressed to Intel CEO Pat Gelsinger, Senator Wyden, who chairs the Senate Finance Committee, questioned the company's strategy. He pointedly asked, "What is Intel trying to achieve with these layoffs?" The senator's inquiry reflects growing concerns about the use of taxpayer funds to support companies that are simultaneously reducing their workforce 2.
The CHIPS Act and Intel's Position
The controversy is set against the backdrop of the CHIPS and Science Act, a piece of legislation designed to bolster domestic semiconductor manufacturing. Intel is reportedly competing for up to $20 billion in subsidies under this act. The company's pursuit of these funds while planning significant job cuts has raised eyebrows and prompted questions about the intended impact of the CHIPS Act on American employment 1.
Intel's Response and Justification
Intel has defended its position, stating that the job cuts are part of a necessary restructuring to improve efficiency and competitiveness. The company argues that these measures are essential for long-term growth and sustainability in the highly competitive semiconductor industry. However, this explanation has done little to quell the concerns of lawmakers and labor advocates 2.
Broader Implications for the Tech Industry
This situation highlights the complex relationship between government subsidies, corporate strategy, and workforce management in the tech sector. As companies like Intel navigate the challenges of global competition and technological advancement, they must balance the need for operational efficiency with their responsibilities to employees and the communities in which they operate 1.
The Role of Government Oversight
Senator Wyden's intervention underscores the importance of government oversight in ensuring that public funds are used responsibly and in alignment with broader economic goals. The scrutiny faced by Intel may set a precedent for how other tech companies approach workforce decisions while benefiting from government support 2.
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