There is a low-margin structure coupled with a high cost, and difficulty in gaining profits is going to be a serious challenge towards the end of 2024,
US based global semiconductor giant Intel has now decided to layoff 15 percent of its workforce, which is around 15,000 after an unimpressive revenue generated in Q2 2024. According to media reports, the company is aiming to save $10 billion by 2025 from the layoff. The unexpected moves from these semiconductor companies have also sparked outrage among the laborers in Samsung semiconductor, who also mentioned how mismanagement in the labor division will negatively impact the industry.
Pat Gelsinger, the CEO of the firm has stated that the decision owing to slower revenue than expected and the company do not have the potential to fully capitalize on latest trends like artificial intelligence (AI). There is a low-margin structure coupled with a high cost, and gaining profits is going to be a serious challenge towards the end of 2024.
After the IDM 2.0 initiative was unveiled by the company, Initel has witnessed limited success despite the initiative was meant to perk-up foundry potentials and producing its own products. The CEO also added that revenues continued to become low, and losses are constantly escalating.
According to a report by Digi Times, in the Q2 2024, of 2024, Intel’s foundry revenue decreased by US$100 million quarter-over-quarter, with losses increasing by US$300 million. Similarly, Intel’s Data Center and AI division remained stagnant at US$3 billion, with operating income down by US$200 million. When the company was questioned about the timing of the layoffs, the company stated that the revenue of 2020 was $24 billion greater than 2023, and therefore employee strength augmented by over 10 percent.
Rival Samsung on the other hand seems to be on the same page because the device and semiconductor solutions division saw its revenue drop by 8.6 percent from 2020 to 2023, with operating profits plunging from a surplus of KRW18.81 trillion (approx. US$137 million) to a loss of KRW14.87 trillion. Despite a huge slump in revenue, Samsung witnessed a growth in employees of upto 25.8 percent. , from 74,415 in 2020 to 93,639 in 2023.
