Intel Corp (INTC) has found itself under scrutiny from Senator Rick Scott for its plans to downsize, even though it’s a recipient of a $20 billion grant under the U.S. Chips Act. This subsidy, aimed at bolstering domestic chip production, is designed to generate over 10,000 manufacturing jobs and 20,000 construction jobs for projects in Arizona, New Mexico, Ohio, and Oregon. The U.S. strategy aims to reduce its dependence on Asian nations like China for semiconductor technology.
Senator Scott expressed concern over the potential impact of Intel’s layoffs on its planned semiconductor manufacturing investments, asking how many U.S. employees would lose their jobs. This inquiry follows Intel’s recent announcement of a $10 billion cost-reduction plan, which includes over 15% headcount cuts. This decision comes after a disappointing second-quarter report, showing a 0.9% decline in revenue, falling short of analysts’ expectations.
The news of Intel’s downsizing comes just weeks after Lip-Bu Tan, a member of the mergers and acquisitions committee, departed from Intel’s board. This departure adds to the company’s current challenges.
Meanwhile, Nvidia Corp (NVDA), a competitor, has taken a different approach. CEO Jensen Huang has prioritized retaining employees, offering them attractive compensation packages to offset the demands of their work.
Intel has ambitious goals, aiming to ship chips for over 100 million AI personal computers by 2025, including over 40 million in 2024. However, the company’s stock has taken a hit in the last year, plummeting 43%, due to the impact of the AI shift on its PC and data center businesses. Nvidia, on the other hand, has thrived in this environment, seeing its stock surge by 158% over the past 12 months.
INTC stock traded up 0.25% at $19.66 in premarket trading on Thursday.
