Intel’s austerity plan is becoming increasingly clear. After announcing a 15% reduction in its workforce (18,000 people affected) and a 10 billion dollar (8.9 billion euro) savings plan following the publication of disappointing results for its second fiscal quarter in early August, the American semiconductor company The technology giant announced on Monday 16 September that it was postponing the construction of two factories, one planned in Germany and the other in Poland, despite the huge subsidies offered by both countries. The details of the savings plan are expected at the end of September at a meeting of the company’s board of directors.
Warsaw had just proposed $1.8 billion in public aid to the American group for a $4.6 billion industrial project at a new site in Miekinia, twenty kilometres from Wroclaw in western Poland. The denial is even greater for Germany, which had been counting on an investment of 30 billion euros to relocate chip production to Europe and for which Berlin had said it was ready to offer funding of 10 billion euros. In June, Intel had already announced the suspension of the expansion of one of its factories in Israel, where it is based.
These announcements undermine the strategy of Pat Gelsinger, who was appointed CEO of the company at the beginning of 2021 after having worked there from 1979 to 2009. When he took over the leadership of the Santa Clara, California-based company, he set himself a dual objective: to maintain technological progress in semiconductor design, but also to increase its production capacity, in order to collect orders from its competitors who have preferred a “fabless” model, dedicated solely to the design of new chip models.
The sequence of events initially favoured it, with the Covid-19 crisis boosting sales of the products that make up its products (PCs, servers), but also with Sino-American tensions encouraging Americans and Europeans to offer massive subsidies to promote the sector. Intel was also forced to relocate chip production to its territory ($39 billion promised to the United States in 2022) to avoid a possible break in the supply chain with giants such as Taiwan’s TSMC. Intel was even the main beneficiary of the aid proposed by Washington, with $8.5 billion in subsidies promised for its facilities in Ohio and Arizona, not counting credit aid. Unfortunately, the post-Covid-19 era has seen a collapse in PC sales, a sector where Intel’s partnership with Microsoft had its heyday.
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