Intel plans on slashing employee salaries to preserve cash.
Intel CEO Pat Gelsinger will take a 25 percent pay cut, while his executive team will see their paychecks shrink by 15 percent. Manager compensation will dip by 5 percent to 10 percent, depending on seniority, while employees below the rank of Principal Engineer will likewise suffer a 5 percent reduction.
“Quarterly pay bonuses are gone, annual bonuses are being paused, 401k match is halved from 5 percent to 2.5 percent, merit-based raises are suspended, and there is a pay cut to all employees’ base salary based on grade,” reported SemiAnalysis, citing anonymous sources within the company. (However, Intel will continue to pay dividends to shareholders.)
Intel certainly needs the cash for its ambitious plans, which include a “foundry initiative” that will cost billions of dollars and take years to fully actualize. Once the world leader in chip design, the company now faces considerable pressure from former clients (such as Apple) deciding to manufacture their own chips in-house. Intel’s solution centers on manufacturing chips to new clients’ specifications—leading to the construction of a massive chip-manufacturing facility in Columbus, Ohio. Once completed in 2025, this Ohio complex will include two chip factories employing more than 3,000 people. (There are also plans to build another massive production facility in Europe.)
Intel faces competition on the chip-fabrication front from companies such as Samsung and TSMC, which have also pledged to invest significant funds into new facilities throughout the country.
Although numerous tech giants have initiated layoffs and cut in-office perks over the past few months, few have dared to touch their tech professionals’ compensation—and with good reason. Retaining tech pros, especially those with specialized skills and experience, takes a lot of effort, and slicing their pay by even a few percentage points potentially gives competitors an opening to swoop in with a tantalizing offer. Any company cutting salaries must ensure that other aspects of an employee’s package will keep them happy, including benefits, flexible schedule, and a positive office culture. Does Intel have those things in place?