Intel Cuts Pay to Cut Costs
New intel from Intel says that some employees at the company will be taking a pay cut—even the CEO.
Layoffs are ravaging the tech industry due to the wildly abstract threat posed by "the economy," but Intel is taking a different approach. Instead of laying off thousands of its workforce, the company has seemingly decided to make sweeping pay cuts from 5% to 25%.
Dylan Patel first reported on the pay cuts in his newsletter SemiAnalysis yesterday. Patel says that multiple employees have relayed to him that Intel is looking to cut costs to meet its quarterly dividend, and some employees are the ones footing the bill. According to a source within Intel, employees below and including Principal Engineer will be receiving a 5% pay cut with the exception of hourly and junior-level employees, who will not be affected by the cuts. Glassdoor and a Google Jobs posting reveal that Principal Engineers can make upwards of $170,000 at a minimum.
Likewise, VPs are taking a 10% hit, the executive leadership team is taking a 15% cut, and CEO Pat Geslinger will cut his salary by 25%. In addition to the pay cuts, there will be no quarterly or annual bonuses for now, merit-based raises are paused, and 401k match is is being reduced from 5% to 2.5%. Intel is still reportedly planning to lay off several hundred employees in California according to local media, which is still drastically less than other tech companies.
And it isn't only pay that is being cut...
Intel to Cut Alder Lake CPU Pricing by 20%: Report
The move could do more than reverse a price increase initiated in Q4 2022:
According to unnamed industry sources, Intel has decided to slash the prices of its 12th Generation 'Alder Lake' Core processors. Taiwan's DigiTimes says that Intel will chop up to 20% off Alder Lake CPUs for its PC partners. The source indicates that this price cut will be to encourage orders/boost demand, with hints that the cuts will affect both desktop and laptop CPUs. On top-tier products, the cuts could mean a price cut of up to $130 per processor.
Recent Intel news has pointed to turbulence taking the business off course. Earlier today, Intel confirmed wide-ranging cuts to wages and bonuses for ALL employees. Last week the chipmaker posted its largest loss in years. In recent weeks we have also learned about Intel canceling R&D expansion plans, like the IDC21 in Israel and the Hillsboro Mega Lab in Oregon.
[...] Intel has some hope that there could be a turnaround in the fortunes of the PC business in H2 this year, and a number of supply chain sources speaking to DigiTimes are more positive about H2, too. Thus, in some ways, significant Alder Lake price drops could be a good opportunity to snag a more affordable Socket LGA1700 PC, which could be upgraded to Raptor Lake or even a Raptor Lake refresh processor further down the line.
Previously: Intel Quietly Raises Prices for 12th-Gen Alder Lake CPUs, Now Cost More Than 13th-Gen
Related:
- Intel Suffers Double-Digit Revenue Decline in Q4 2022
- AMD Has Been Cutting Supply of CPUs and GPUs to Keep Prices High
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Intel has raised the pricing of its 12th-gen Alder Lake processors in its online Ark product database, reflecting a 10% increase in pricing for the company's previous-gen desktop PC chips. In some cases, that can be a ~$60 increase in the price for a chip:
For now, the company's newer 13th-gen Raptor Lake processors, which come with more cores and drastically faster performance, are actually less expensive than the previous-gen models. However, we expect the Raptor Lake models to also see price hikes soon, perhaps giving AMD a leg up in the pricing department.
[...] In an odd twist, that means the previous-gen Alder Lake models are now more expensive than the current-gen Raptor Lake chips. However, the latter comes with more cores and is significantly faster, topping both our list of the best CPUs for gaming and our CPU Benchmark Hierarchy, so we expect those chips will also see price hikes in the coming days.
I checked Ingram Micro to confirm and right now a 12th-gen i9-12900F 16-core 2.4GHz CPU is $502.26, while a 13th-gen i7-13700KF 16-core 3.4GHz is $404.27.
Intel's two biggest business units were hit hard during the last three months of 2022:
Poor sales of PC and server chips caused Intel's revenue for the fourth quarter of 2022 to dive 32% year on year, leading to a $664 million net loss for the quarter.
The outlook for Q1 of 2023 is not an optimistic one either, with CEO Pat Gelsinger telling analysts in a call, "Our results and our Q1 guidance are below what we expect of ourselves."
However, he said that Intel is "working diligently to address the challenges brought on by current demand trends" and the company continues to have confidence in its long-term plans and trajectory.
Intel took the biggest hits across its two largest business units, with the chip maker's Client Computing Group (CCG) and Data Center and AI group (DCAI) posting year-on-year revenue drops of 36% and 33%, respectively.
The CCG business unit, which makes desktop and laptop CPUs, posted $6.6 billion in revenue, down from $10.3 billion a year earlier. This freefall can largely be attributed to a significant and ongoing slump in the PC market. A report from IDC found that sales of PCs had fallen by 28.1% during the same period, findings that were echoed by research firms Canalys and Gartner, whose estimates showed a 29% and 28.5% drop, respectively. Gartner reported that this was the steepest decline since it started tracking the PC market in the mid-1990s.
This trend is likely to carry on into the first quarter of 2023, Gelsinger said on the call with analysts.
AMD CEO Says It's Limiting Supply of CPUs and GPUs to Maintain High Prices
AMD CEO Says It's Limiting Supply of CPUs and GPUs to Maintain High Prices:
[...] The somewhat startling admission came during the company's quarterly earnings call. AMD is doing quite well despite the industry downturn. It reported 42% year-over-year growth in its data center products. Intel reported a drop of 33% YoY for its data center chips, so the contrast is remarkable. For client PC and gaming, however, AMD is also feeling some pain. It reported a 51% decline YoY in processor shipments. This led to a loss of $152 million compared with a profit of $530 million a year ago, according to Yahoo.
But even though AMD's consumer and gaming revenues are tanking, it's still found a way to keep the numbers up through that old chestnut: supply and demand. According to remarks noted by PCGamer, Dr. Su says it's been limiting supply and will continue to do so. "We have been undershipping the sell-through or consumption for the last two quarters," said AMD's CEO. "We undershipped in Q3, we undershipped in Q4. We will undership, to a lesser extent, in Q1."
It's an interesting admission that explains why CPU and GPU prices haven't crashed along with the PC market. It makes us wonder if Nvidia is doing something similar. Although some decent deals on GPUs appeared a few months ago before AMD and Nvidia launched new architectures, those deals have now vanished.
(Score: 1, Insightful) by Anonymous Coward on Sunday February 05, @01:49PM (8 children)
What a wonderful way to drive away the best employees, while keeping the hangers-on.
(Score: 1) by Runaway1956 on Sunday February 05, @05:54PM (1 child)
Those who exit first, didn't really want to be there anyway. I guess it all depends on how you define "the best". With the job market drying up, good luck on finding a new job in short order. Six months ago, you may have walked out the door, and been employed the next morning. I remember those days, in the construction industry. Things change, and even the best of the best might find it hard to find a job when the changes aren't to your liking. Of course, one can always learn how to ask, "Would you like fries with that?" There is no shortage of jobs at Mickey D's - - - yet.
Abortion is the number one killed of children in the United States.
(Score: 3, Insightful) by Opportunist on Sunday February 05, @07:02PM
Those who exit first are the ones you don't want to lose. The ones that can easily find a new job because they have skills and experience, and they get hoovered up by whatever competitor you have.
What you retain is the ones that cannot do this, the ones that are either too lazy to seek a new job or who can't get a new job because they lack the skills needed and only have outdated skill sets nobody needs anymore, and they hope you don't notice they are basically dead weight.
(Score: 5, Insightful) by TheGratefulNet on Sunday February 05, @07:35PM (1 child)
ceo's dont care. they dont relate to everyday expenses and costs, like housing, food, all that 'fancy' stuff.
there is a trend every so often when its 'time' to punish workers. because, reasons.
they are all doing it now since its fashionable and there's strength in numbers. 'its not us, its everyone!' they cry.
like, they have no control over this.
any company that does 'annual layoffs' is a fucked up place I never want to work at or do business with.
its sad that the ruling class FEELS THE NEED to beat on their lowers, in a periodic basis.
really sad. bullies have to bully just to feel powerful.
I have never liked any person who claims to be a ceo. all US ceo's are ruthless and cruel. the cruelty is the point, as they now say.
"It is now safe to switch off your computer."
(Score: 3, Insightful) by Anonymous Coward on Monday February 06, @01:14AM
The longer I spend in this world the more I realize barely anyone knows what they're doing. Could be sports coach at school, professor at college, boss at workplace. They picked up a few skills from others or got lucky figuring one or two things out by accident, and then stopped. Now they view themselves as a minor God, crushing all comers with their talent.
There seems to be a disconnect where marginally skilled people forget (or never knew) what it takes to acquire skills. Humility, openness, friendship, team spirit, collaboration, honesty. Instead we end up in these toxic institutions with Wellness(tm) coming out the ass and consultants brought in with a new acronym to supposedly improve things. I think you have to say at this point it's on purpose. The intention must actually be to screw people; or rather screw with people in order to screw them.
Not sure who referred to this guy, but a lot rings true: https://en.wikipedia.org/wiki/Byung-Chul_Han#Thought [wikipedia.org]
(Score: 0) by Anonymous Coward on Sunday February 05, @08:11PM
Southwest Airlines took this approach after 9/11 where almost all the other airlines were cutting employees, and in Southwest's case, it worked wonders. They gained a lot of market share and employee loyalty. Whether that can be duplicated here remains to be seen.
(Score: 3, Insightful) by Snotnose on Sunday February 05, @10:06PM (1 child)
From my experience in the 80's, where I was a good employee, the first layoff after a huge growth spurt got rid of the deadwood.
I started as an electronics tech, fixing PCBs as they came in (at the time less than 10% worked from the factory. And I'm talking 1 in 12. Why did we get 12 boards a shipment, and why do I remember that number? Hellifino). Got promoted to Software Engineer, company grew like weeds for 3-4 years, then the 40% profit went to 30%. Boom, layoffs. Which were, kinda, nice. The assholes who took up my time while contributing nothing were gone (Hey Steve from Loral Instrumentation, remember when you broke the passenger door handle to my pinto and placed it in the seat instead of telling me? Plus you kept wanting to talk to me while I was trying to troubleshoot broken boards? Yeah, you were useless and I was glad to see you go. I just wish I could remember your last name cuz another Steve, who helped me write Space Invadors for the SBA100, vaulted me from tech to engineer. But I digress (Hey Mr David, how ya doin?)).
Then the second layoff. About 6 months after the first (we're talking mid '80s here). Company is making a good profit but not what Wall Street wanted. Good people got canned, this was a new thing we were all WTF about. Then the third, where they started nailing good folks. About this time Jerry Stamper, President at the time, said in an all hands meeting, "no more layoffs are planned". Did I mention the day after the second layoff Jerry arrived to work in a brand new Corvette?
I got hit in the 5th layoff. Company was making plenty of money, I bet on the wrong horse (ran into that fucker 10 years later at General Instrumentation and got to see him shitcanned (hey Jay, hope you're dead by now)
I'm retired now but, if I had a bit of advice to younger workers it would be:
1) Loyalty to the company will fuck you
2) You will get a better raise if you change companies.
3) There are some companies, like Qualcomm in the 90s, that reward you. Treasure those, but beware when they change hats in the '00s and you should move to Viasat.
I just passed a drug test. My dealer has some explaining to do.
(Score: 2) by Phoenix666 on Monday February 06, @09:24PM
Those are good pieces of advice. I'd add a subpoint to 2) that says "If you want a promotion, change companies." If you're good at your job at your present company, your boss will want to keep you where you are because you make him look good.
Washington DC delenda est.
(Score: 3, Interesting) by sonamchauhan on Sunday February 05, @11:11PM
Not really.. a 5% pay cut for tech workers (more for managers) isn't bad. For almost a year during the pandemic, I had a 20% cut, along with a 4-day week. Back to normal now.
Choosing pay cuts over redundancies is what HP did in the 70s, back when it was run well by Hewlett and Packard.
(Score: 4, Insightful) by PiMuNu on Sunday February 05, @02:21PM (3 children)
Normally the senior folks get the big bonuses in good times and the low levels take the pain in the bad times, so nice to see it working the other way around for once.
(Score: 3, Insightful) by Immerman on Sunday February 05, @05:52PM
Yeah. Even if the total savings from the upper-tier pay cuts might not be that big in comparison, having management take it on the chin themselves probably makes it a lot easier to swallow for everyone else.
I think in many ways I'd actually prefer that to the usual "we fired 10% of the workforce, the rest of you are going to take up the slack for no more money, and we'll enjoy our new bonuses for cutting costs"
(Score: 5, Insightful) by Opportunist on Sunday February 05, @07:04PM (1 child)
Think again. The CEO took a PAY cut. Remember that 99% of his compensation comes in the form of bonuses based on performance. Which probably soared because he just slashed the pay across the board.
I kinda doubt that the CEO really goes home with less money.
(Score: 3, Informative) by sonamchauhan on Sunday February 05, @11:05PM
No bonuses
(Score: 1, Interesting) by Anonymous Coward on Sunday February 05, @03:43PM (2 children)
Sure they are making less in recent times than compared to the pandemic time when lots of organizations bought laptops for their staff so they could work from home. In many countries there were even incentives/tax breaks etc that would reduce the cost of such stuff.
If most people's PCs/laptops are still new it shouldn't be a surprise if most organizations bought a lot fewer new PCs in 2022/2023. Same even for servers. In 2020-2021 lots more people on Teams etc = add more server hardware. After that, when more people return to the office, I doubt they need to add as much server hardware per quarter.
This seems like a company finding an excuse to cut salaries just because it's no longer Black Friday season and sales are down.
(Score: 2, Interesting) by Runaway1956 on Sunday February 05, @06:01PM (1 child)
Apparently not. However, they are planning to cut prices for their product, so when you factor that in, maybe so.
This isn't your typical quarter-to-quarter profit maximization tactic. Intel is thinking strategically, in the long term. They believe this move will strengthen them going into the future.
I can't possibly say whether they are right to believe so, or not. I do give them credit for looking beyond the next quarter, or even the next six quarters. The MBAs are thinking outside the box, which is probably a Good Thing Inside©®™℠.
Abortion is the number one killed of children in the United States.
(Score: 4, Interesting) by turgid on Sunday February 05, @08:42PM
They may be cutting prices for their products, but I would have thought that most of the Engineering salaries and bonuses were on R&D, in other words future products under development and being designed. Does that mean that intel is scaling back its ambitions for its new stuff? Will there be less invested in the x86 line of CPUs?
I refuse to engage in a battle of wits with an unarmed opponent [wikipedia.org].
(Score: 4, Insightful) by Thexalon on Sunday February 05, @03:47PM (5 children)
Specifically, what's going on is:
1. Elon Musk's complete incompetence at running Twitter has caused about 75% of its staff to leave or be fired.
2. Meta fired a bunch of people because of an open letter by a tech-focused hedge fund named "Altimeter Capital Management, Ltd" is apparently going around to tech CEOs demanding layoffs, because those pretty much always boost the stock price a bit. The one to Meta is public. That hedge fund's profits being funded by thousands of wrecked lives, people deported because they were in the US on a work visa, etc is what they refer to as "efficiency".
3. Amazon laid off a bunch of people because their shareholders demanded it after the profits were disappointing.
When reporters talk about "the economy", I've found a useful exercise is to replace that with "this reporter's stock portfolio". That usually results in greater accuracy.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 5, Interesting) by captain normal on Sunday February 05, @05:44PM (2 children)
If I may, let add a bit to this. A bit of googlefu shows this to be the work of Brad Gerstner, a MBA day trader/stock trot.
https://en.wikipedia.org/wiki/Altimeter_Capital [wikipedia.org]
https://en.wikipedia.org/wiki/Brad_Gerstner [wikipedia.org]
I do find it interesting that a hedge fund holding less than a billion U.S. dollars, could hold sway over a multi-billion buck Meta.
"It is easier to fool someone than it is to convince them that they have been fooled" Mark Twain
(Score: 1, Informative) by Anonymous Coward on Sunday February 05, @08:01PM (1 child)
Perhaps he's seen as a "genius" on this kind of thing and blindly follow what he says, like a lot of companies did with Jack Welch or Milton Friedman.
(Score: 0) by Anonymous Coward on Monday February 06, @03:18AM
Perhaps it's what the executive wanted to do anyway - because God complex - and this useful idiot gave them the excuse (and now believes himself to be God).
(Score: 0, Troll) by crafoo on Sunday February 05, @05:57PM (1 child)
It's simply market and credit cycles. Tech runs on cheap money. It's the nature of the business. It requires cheap money: cheap credit, bull stock market.
What is happening now is simply a part of the standard credit/market cycle and it's all due basic economic fundamentals. Interest rates are relatively high (although not high enough to actually combat inflation), inflation is high, credit is available although not free-flowing: you need excellent credit.
The treasury has said it is already going to monetize the debt, and the Fed will pivot (probably around July). You haven't seen real inflation yet. But it's coming! And the tech industry is going to take it pretty hard.
(Score: 3, Insightful) by Anonymous Coward on Monday February 06, @03:21AM
> It's simply market and credit cycles
You might as well say it's the ascending Moon in Sagittarius. Whatever. Funny that is always works out that the rich get their tax but and the peons take a bath. Oh, oh, oh, just market cycles I mean.