The prices of chips in the world rose rapidly - and then crashed.
Intel is forced to deal with the need to become more efficient. (Photo: Intel)
A week ago, Intel, the technology giant and the largest employer in the Israeli high-tech industry, announced the layoffs of dozens of workers in Israel, as part of the company's efficiency plan, which will eventually result in thousands of workers worldwide being laid off.
Despite the need to become more efficient, the ambition is to lay off as few employees as possible and take a gradual course, subject to the goals set by the management, but also to what will happen in the next three years in the fluctuating chip market.
The efficiency plan, announced by
Pat Gelsinger, the relatively new CEO of the global technology giant
, is supposed to save between 8 and 10 billion dollars and will be spread over three years.
Each global division, whose business units are scattered around the world, received a financial reduction target that it must meet, and each of the division's managers is tasked with finding the best way to do this, with the priority being to reduce projects, give up offices following the transition to hybrid work, and downgrade to the unit level the business, each of which will examine how costs can be reduced.
Workers will be laid off, in any case, only after cutting other resources.
For those of the employees who may find themselves facing a hearing, it was proposed to go on an abbreviated layoff, until matters are clarified, and for those who prefer to leave, a generous retirement package is offered, which varies from one employee to another, different business units, and from country to country. The retirement package that will be offered in Denmark will be tailored to its size and will be It differs from the retirement package of the employees in Israel and will depend on the position and seniority.
Intel's R&D center in Israel. An attempt to reduce expenses (Photo: Yehats)
Will the benefits and grants prevent layoffs?
Intel Israel employs approximately 14,000 people.
The dismissal of dozens of them is a blow, but relative to the size of the company, this is a relatively small number.
What's more, that the plan will be implemented with a thumbs-down and take into account what is happening in the chip market, which has known a shortage due to Corona, which initially led to a crazy price increase, but following it to the flooding of the market, which crushed the prices, this in view of a slowdown in the global economy, which is suffering from inflation.
This is a completely different conduct from companies that jointly determine efficiency through the dismissal of a certain percentage of employees, which is indisputable.
Intel's streamlining comes as part of the change in strategy and focus led by CEO Pat Gelsinger, who took office in February 2021 and is changing the company's traditional chip manufacturing model.
Instead of controlling the entire development and production chain of the chips, the company will switch to an "Intel first" model, which will maintain the construction of most of the company's products in the factories it owns, but will transfer part of the production to external factories, outsourced, also for some of its important products.
At the same time, Intel wants to become a significant manufacturer of chips for other companies, who will develop and design them for them and produce them in Intel factories.
All this should strengthen the profitability of the company, which is suffering from a decrease in sales and income and is dealing with a fluctuating market.
Against the background of the grants amounting to billions of shekels and the enormous tax benefits that Intel received from the State of Israel during the decades that it has been operating here, it was possible to demand that the company not lay off any workers in Israel.
We have to wait and see if the company will actually keep its word and be content with laying off only a small number of employees and under exorbitant conditions.
Intel Israel responded:
"As stated a few months ago, and in response to market conditions and macroeconomic changes, Intel Global is working to save billions of dollars in costs over the next three years.
We are doing this through a variety of different channels, including evaluating and maximizing the utilization of our real estate spaces in accordance with the hybrid work model, optimizing the size of teams and limiting Hiring workers, which will lead to a certain reduction in manpower around the world, including in Israel.
The handling of the personnel issue is also done through various actions, including an offer to go on sick leave, part-time positions and voluntary retirement packages."