The semiconductor industry worldwide sees a job crisis as Intel plans to let go 15,000 jobs to save $10 billion amid weak results, while BelGan files for bankruptcy due to a cash shortage.
Two significant players in the global semiconductor sector are grappling with crises in the US and Europe. On Thursday, American chipmaker Intel’s CEO Pat Gelsinger announced it will reduce its workforce by 15%, translating to around 15,000 jobs, to revitalise its business and better compete with rivals such as Nvidia and AMD.
At the same time, BelGan, a Flemish semiconductor firm that spun off from Onsemi in 2021 and specialises in power chips, declared bankruptcy due to a cash shortage amid its site transformation. The 440 employees’ jobs are now at risk, with some already on part-time status as a cost-saving measure.
The job cuts came after a disappointing quarter and forecast for Intel. The company Intel reported a $1.6 billion loss for Q2’24, with revenue down 1% to $12.8 billion, missing Wall Street’s forecasts.
On the other hand, BelGan was working to transform its Oudenaarde manufacturing site into a foundry for gallium nitride (GaN) chips, a project that became more expensive than planned. Despite initial shareholder investments, the company faced difficulties securing the additional funding needed for its ambitious plans, leading to its insolvency.
In a memo to employees on Intel’s website, the CEO stated that the company aims to save $10 billion by 2025 through a new operating model that reduces costs and improves efficiency. It will offer an “enhanced retirement package” and a voluntary departure program for eligible employees next week, with most layoffs anticipated to be completed by the end of this year.
As per reports, the Santa Clara-based company is also halting its stock dividend as part of its cost-cutting strategy.
However, BelGan’s future remains uncertain, although management is open to working with potential investors on a possible restart. According to Ronny Loubris of the trade union ABVV, the company held a special works council meeting to inform staff and explain the cause.
Presently, Intel’s CEO hopes that while their AI PC investments may pressure short-term profits, they may pay off in the long run. He predicted AI PCs will grow from under 10% to over 50% of the market by 2026, marking a turnaround for the company. Unlike rivals like Nvidia, Intel designs and manufactures chips, besides expanding its U.S. foundry operations to compete with leaders like TSMC.
Regardless of that, experts like eMarketer analyst Jacob Bourne noted that while Intel’s cost-cutting and layoffs may improve short-term finances, they cannot reshape its position in the evolving chip market.
The company must leverage U.S. manufacturing investments and rising global demand for AI chips to strengthen its role in chip fabrication.
On the other hand, referring to BelGan’s fate, industry expert Robert Quinn commented, “This development highlights the challenges faced by firms in the competitive and capital-intensive semiconductor industry, particularly those pivoting towards emerging technologies. BelGan’s situation serves as a stark reminder of the financial risks associated with semiconductor innovation and manufacturing.”
