Layoffs await at GlobalFoundries as the company looks to cut costs
The semiconductor manufacturer is planning to reduce its workforce as the company looks to navigate itself through a period of weaker demand and increased costs.
In a leaked internal video memo – published by VTDigger – CEO Thomas Caulfield provides an explanation of the market situation and the macroeconomic headwinds facing the company. In order to position GlobalFoundries to endure a longer period of demand weakness, the company is taking proactive measures to drive cost reduction – something that will include GF’s largest area of cost, labour.
The company recently reported its third-quarter results and fourth-quarter outlook. For the third quarter, GF recorded a 22% YoY revenue increase and delivered record gross, operating, and net profits. The company also provided strong guidance for the fourth quarter.
In the video memo, Mr. Caulfield states that over the last four to six weeks, the company has seen an unprecedented shift in the near-term outlook for semiconductor demand.
“We are facing rapidly developing uncertainties in the global economy, including high inflation, continued elevated energy costs and the rapid interest rate increases as governments around the world attempt to get this inflation under control. These actions have led to reduced consumer and corporate spending that in turn are beginning to weigh on demand across several of our end markets.”
The semiconductor manufacturer says that its customers are seeing rising inventories in their channels and as a response are also seeing their customers significantly slowing orders with them.
“There are those in the industry that believe these issues will last through the first half of next year, 2023. However, given the nature of the uncertainty these challenges represent, we need to be prepared and must position GF to endure a longer period of demand weakness. We cannot simply ride out the storm. We must actively navigate our way through it,” Thomas Caulfield says in the video.
The CEO says that while the company will “continue to work aggressively to keep our fabs highly utilised, we are proactively taking measures to drive cost reduction and we’ll need your support to accelerate these measures.” This will include managing capital spending but also a reduction of the workforce.
“Like others in the industry and across this technology sector, we also need to address our largest area of cost, which is labor. We have already instituted a hiring freeze. But based on our assessment of the depth and duration of this downturn, we will also need to take a set of focus actions to selectively reduce staffing in key areas of our business.”
Evertiq has reached out to GlobalFoundries for more information.