In December 2022, US contract chipmaker GlobalFoundries is scheduled to lay off up to 800 workers. It demonstrates that job security is not a given for a business that posted record earnings.
Vermont publication VTDigger broke the layoff news first. It reported that the proposed job cuts comprise 5.7% of the company’s 14,000 employees globally.
The layoffs follow a statement made by Thomas Caufield, CEO of GlobalFoundries. He stated to investors in early November that the business planned to cut operational expenses. This is due to “macroeconomic instability” and signs of less demand from certain clients in 2023.
Caufield informed the staff during the meeting that non-manufacturing positions like executives are likely to be most affected by the layoffs. Let us elaborate on GlobalFoundries layoffs in this article.
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About the company
One of the top semiconductor producers in the world is GlobalFoundries Inc. (GF). GF is based in Malta, New York, and was founded in the Cayman Islands.
GF offers customers feature-rich solutions that let them create cutting-edge products for pervasive chips in markets with high growth rates.
GF offers a wide range of feature-rich process technology products. It uses a distinctive combination of design, development, and fabrication services.
GF is a dependable technology source for its clients worldwide, with at-scale manufacturing facilities in the United States, Europe, and Asia.
GF was a privately held company until its initial public offering (IPO) in October 2021. Mubadala Investment Company, the sovereign wealth fund of the UAE, controlled it.
GlobalFoundries supplies chips for over 7% of the $86 billion semiconductor manufacturing services market. It is the fourth-largest semiconductor producer as of 2021. It is the only one that runs businesses in Singapore, the EU, and the US.
On October 28, 2021, the business raised around US$2.6 billion. This was done by selling shares in an initial public offering (IPO) on the Nasdaq stock exchange for US$47 per share. It was at the higher end of its intended price range.
GlobalFoundries stated on April 26, 2021, that it was moving its worldwide headquarters. It is immediately relocating from Santa Clara, California, to its facility in Malta, New York (where Fab 8 is located).
Despite record profits, GlobalFoundries expects up to 800 layoffs
The New York-based foundry revealed its plans for layoffs on December 5, 2022. It blamed a weak economy despite believing 2022 would be a golden year and its wish for chip subsidies from Uncle Sam.
GlobalFoundries said in a statement during an all-employee meeting:
“We discussed the cost-saving actions we have initiated across our business. This is a result of the current macroeconomic environment. These actions include lowering corporate and manufacturing-related expenses.
It has also been selectively cutting our workforce by less than 800 employees worldwide before the end of the year.”
The chipmaker announced record earnings and sales for the third quarter of 2022, which concluded on September 30. At that time, Caulfield made these statements.
“We produced record gross, operating, and net profits and saw a 22% increase in sales year over year. Thus, we made large progress toward our long-term financial plan. We’re still on track to have a successful and profitable year.”
At an all-hands meeting, reporters asked why the company couldn’t avoid layoffs given its recent earnings. But GlobalFoundries officials remained silent.
Besides, GlobalFoundries joined the Philadelphia Stock Exchange Semiconductor Index in September due to its success. It rates the 30 top semiconductor companies listed in the US according to market capitalization.
The chipmaker split from AMD in 2009 and also carried out the cuts. It receives $30 million in federal funding. This is meant to develop next-generation gallium nitride-on-silicon technology for many applications. This includes 5G smartphones, RF wireless infrastructure, electric vehicles, and power grids.
Like many other semiconductor firms, GlobalFoundries has similar worries. It was about how an ailing economy, troubled by the COVID-19 epidemic, conflict, and trade war between the US and China, will diminish demand.
Yet, it causes us to hesitate when we compare the company’s layoff plans to its recent stellar performance. Also, the fact that it has received more than tens of millions of dollars in taxpayer funding
It’s also important to note that the company’s situation contrasts with that of Intel. Intel also declared its plan to make layoffs and reduce spending by billions in late October 2022. It happened after reporting a third-quarter sales decrease of 20% over the prior-year period and a profit decline of 85%.
Nearly 150 Vermont employees were let go by GlobalFoundries
One hundred forty-eight people in Vermont will be let go by GlobalFoundries, according to a notice submitted to the state in December 2022. The $32 billion semiconductor company employs nearly 2,000 people at its Essex Junction facility.
This makes it the largest private employer in Vermont. About 7% of the company’s Vermont employees have been laid off.
This is the first round of major layoffs at GlobalFoundries’ Vermont facility. It was since the business cut 116 workers in June 2018, according to state data. In a statement sent to Vermont Public, a representative for GlobalFoundries, Gina DeRossi, said,
“As we move forward to 2023, the semiconductor market faces softer demand as the world’s economy slows. We cannot foresee the extent or length of these pressures. Like others in our industry as well as the technology sector. So we have started a hiring freeze and are carefully decreasing our global workforce.”
More job losses are occurring in “non-manufacturing” positions than in manufacturing, according to DeRossi. She also stated that laid-off workers “are given support to help with their shift.”
GlobalFoundries wants to freeze hiring and drop jobs despite federal subsidies. According to the company’s state filing, the layoffs will go into effect on March 17, 2023. As Governor Phil Scott remarked at a press conference, there are already plenty of options available.
So that will give affected employees time to hunt for new employment. After hearing about the layoffs at GlobalFoundries, Scott claimed he received calls from several businesses.
GlobalFoundries laid off 221 in Malta
GlobalFoundries informed 221 staff at its Fab 8 computer chip facility and headquarters in Malta that they would be losing their jobs. Additionally, the business has begun a hiring freeze at Fab 8, which had about 3,000 employees before the layoffs. This news came in January 2023 about the company-wide layoff program.
The layoffs were immediate, according to a GlobalFoundries representative. But the former employees will be “non-working” until the end of March, for 90 days. She said that Fab 8 had also put a freeze on employment.
GlobalFoundries implemented the layoff program to reduce the company’s costs by around $200 million in 2023. This year is predicted to be a challenging year for the chip industry.
German GlobalFoundries Cutbacks
According to various German publications, GlobalFoundries is reducing the size of its semiconductor production facility in Germany by 20%. The non-competitive cost structure of the facility in Germany is the main cause of this layoff. Fab1 is unable to offer a cost-effective
Solution for silicon items that must be made at a much lower cost. According to various sources, out of the 3700 total jobs, between 700 and 800 will be affected.
The transition to electric vehicles continues. So GlobalFoundries and GM agreed to an “industry-first” agreement in February 2023. It would make GlobalFoundries GM’s sole source for US-produced semiconductor chips. It would enable GM to reduce the number of chips used in its cars. The businesses have New York and Malta as production locations.
The agreement would not immediately result in more jobs. But it would instead guarantee stability in the chip supply. Thomas Caufield, CEO of GlobalFoundries, stated at the time of the announcement that the full impact of this increase in output would be felt in two to three years.