After posting a double-digit revenue decline for its fourth quarter of 2022, Intel is looking to weather a potentially problematic 2023 by making companywide cuts to employee pay.
Responding to media reports about possible pay cuts, Intel said on Wednesday that in order to navigate “macro-economic headwinds and work to reduce costs across the company,” it has made several adjustments to its 2023 employee compensation and rewards programs.
“[These changes] will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy,” the statement continued. “We are grateful to our employees for their commitment to Intel and patience during this time as we know these changes are not easy.”
Though Intel did not divulge details of the pay-cut plan, midlevel workers will have their salaries cut by 5% and senior leaders will be faced with reductions of 10%, according to a media report confirmed by Reuters. The company’s top executives will have their pay slashed by 15%, while Intel’s CEO Pat Gelsinger will also be cutting his base salary by 25%.
The news outlet further reported that Intel will be halving 401(k) contributions and suspending merit-based pay raises and quarterly performance bonuses. However, despite the wide-ranging cost-cutting measures, employees that are paid hourly will not be seeing a reduction in pay, it said.
Intel’s poor fourth quarter performance was not a surprise, given that most consumer-facing businesses continue to see weak demand, said Mario Morales, group vice president of enabling technologies and semiconductors at IDC. Poor sales of PC and server chips has led to weak demand for semiconductors.
“I expect it to be a long recovery for Intel because inventories will not bottom until mid-year, and it will not be until the end of the year going into 2024 when we start seeing year over year growth for the semiconductor industry,” Morales said, adding that the company must hit each product in its roadmap over the next year if it is to stand a chance at recovery.