The management of chipmaker GlobalFoundries warned employees of upcoming layoffs. Inflation and energy prices are on the rise. Demand for chips declines as a result. GlobalFoundries is preparing for an uncertain period by cutting staff.

The plan was announced in an email to employees on Friday November 11. Details are sparse. The management did not disclose which employees will be affected. The timeline is unknown as well.

The layoffs are part of a cost-cutting plan. GlobalFoundries’ most recent quarterly earnings exceeded expectations, but the future is uncertain nonetheless. CEO Thomas Caulfield said several customers have reduced their orders for 2023.

GlobalFoundries expects chip demand to rebound starting in the second half of 2023. Research firm Gartner is less optimistic. Analyst Rich Gordon doesn’t expect the market to start recovering before 2024.

Layoffs

Inflation and energy prices are rising worldwide. Consumers and businesses invest relatively little in IoT, mobile devices and communications equipment as a result. Those are three of the most important markets for GlobalFoundries’ chips.

The organization announced a $200 million savings plan during its quarterly presentation. Although GlobalFoundries said it would focus on ‘operational costs’, layoffs were not specifically mentioned. Meanwhile, staff cuts appear to be a major part of the plan.

The internal email caused an uproar. An individual that’s likely to be employed by GlobalFoundries described the experience in a post on TheLayoff.com. “Nice little email right before the weekend! Hey everyone, you might be getting laid off, but we can’t tell you who, how many, when or even where.”

Industry-wide problem

Chip maker Intel recently warned of layoffs as well. In mid-October, two insiders told Bloomberg that some divisions stand to lose up to 20 percent of their workforce. Intel confirmed that the organization plans to cut staff, though the numbers and timeline have not been disclosed at this time.

Like GlobalFoundries, Intel struggles with the effects of inflation. The PC market is an important market for Intel’s processors. Demand for PCs declined in recent months. High inflation lowers the disposable income of average consumers, reducing the revenue of PC manufacturers and their suppliers.