News Intel CEO announces layoffs, restructuring, expanded return to office mandate

[redgarl]

The Back to the Office mandate is just a disguised way to lower the cost of doing layoffs.

The back to the Office will change NOTHING on the strength of their product portfolio.

 

[TerryLaze]

because they don't have the cashflow to BUY themselves marketshare.

That's exactly what they are doing by building FABs, they have the cashflow to literally build themselves more marketshare.

 

[SonoraTechnical]

well crap.... 15,000 in 8/24 and 20,000 in 4/25 .... 8 months 35k earners are out of work.... but the company got it's public funded subsididy of 10 billion dollars.

 

[JamesJones44]

Does 8 layers deep mean, 8 layers of managers between an executive and an individual contributing employee?

That's how I read it and sadly in a lot of poorly run large companies it's not that unusual. I won't name the company (it wasn't Intel) but I once consulted for a fortune 500 company that had 3 managers over 2 individual constructors and 2 directors over the 3 managers and the ICs were 7 levels below the CTO. It was the most insane thing I've ever been a part of. The worst part is they couldn't figure out why they could never ship a product on time <hand to face>.

 

[Heiro78]

That's how I read it and sadly in a lot of poorly run large companies it's not that unusual. I won't name the company (it wasn't Intel) but I once consulted for a fortune 500 company that had 3 managers over 2 individual constructors and 2 directors over the 3 managers and the ICs were 7 levels below the CTO. It was the most insane thing I've ever been a part of. The worst part is they couldn't figure out why they could never ship a product on time <hand to face>.

I wonder what intel's structure is like. I only know them as having desktop, laptop, and server business. My workplace has several divisions which several brands/ companies (through acquisitions) under those divisions. Going with this definition of layers, there's 5 layers (inclusive of both top and bottom) between an individual contributor and our CEO. And 7 if manufacturing is considered. Here in north america atleast, since the parent company is overseas.

Here's a breakdown of those layers.
Individual
Manager
Director
President
CEO

Individual
Supervisor
Manager
Director
Vice-President
President
CEO

I feel that's pretty typical

 

[JamesJones44]

I wonder what intel's structure is like. I only know them as having desktop, laptop, and server business. My workplace has several divisions which several brands/ companies (through acquisitions) under those divisions. Going with this definition of layers, there's 5 layers (inclusive of both top and bottom) between an individual contributor and our CEO. And 7 if manufacturing is considered. Here in north america atleast, since the parent company is overseas.

Here's a breakdown of those layers.
Individual
Manager
Director
President
CEO

Individual
Supervisor
Manager
Director
Vice-President
President
CEO

I feel that's pretty typical

When I was consulting the latter structure I saw in a lot of big companies. The former existed as well, but not as common as the latter. IMO the good companies had much thinner middle management and no cross functional owners (dotted line manager). Sometimes the mega structures operated well, but most of the time they didn't. Universally companies that had lots of cross functional owners were bad to work with. All of the cross functional owners often just lead to nothing but political infighting to try to make themselves look good by trashing the others.

 

[bill001g]

The Back to the Office mandate is just a disguised way to lower the cost of doing layoffs.

The back to the Office will change NOTHING on the strength of their product portfolio.

I suspect this is the key reason. They have policies that give lots of severance if they lay you off but if you refuse to follow the rules they set you either quit or get fired for cause.

A second reason a lot of companies required people to come back to work is so they could get the tax deductions for the cost of the buildings. Seems the IRS has some strange rules when you leave a building empty and are not actually using it for anything.

 

[Roland Of Gilead]

"I’m talking about the opportunity to fundamentally reinvent an industry icon. To pull off a comeback that will be studied in business schools for generations to come. To create new technologies and deploy them at scale to change the world for the better," Tan said.

"It’s going to be hard. It will require painful decisions. But we will make them knowing it’s what we must do to serve our customers better as we build a new Intel for the future – and I have great confidence in the power of our team and our people to make it happen."

Soundbites are all this is. Of course, Tan has to say these things. He has no option but to sound optimistic. With Q2 revenue below expectations, and zero profit margin, that optimism will fall by the wayside pretty quickly.

As for the assertion above that building more Fabs shows how healthy the company is, well that's just pure dreamland. They can have all the fabs they want, but if they don't have the customers to produce chips for, and their own chips failing miserably, how will that work out!? Time will tell, I guess.

 

[floudclare]

I think the way to go many times is to support nonprofits over for-profit companies. A nonprofit wouldn't take subsidies and grants and use them to pay off their shareholders while laying off workers and cutting pay/benefits like a for-profit company would, they'd use them as intended.

For instance, California, although it's behind schedule, is working with a nonprofit to manufacture $30 insulin for the state. This will easily replace insulin manufactured for insane profits unless their price is lowered to compete.

 

[floudclare]

Insulin is free in many other countries since it was first mass produced hundreds of years ago and has been studied for thousands of years. It's been fully synthesized for decades.

The pharmaceutical companies and their patent lawyers are always first and they make their own markets to enjoy the spoils of snake oils.

California and other States should teach students how to manufacture insulin as a hands on project students could learn in their high school chemistry or biology class instead of teaching whatever it is they teach these days in school.

Save some taxpayer dollars and inspire some young minds while solving the insulin price issue by removing barriers to competition and increasing supply...

Or spend millions of taxpayer dollars on a set aside contract with a non profit that gets free insulin from Europe and resells it for $30 in the US.

The US is depressing sometimes.

 

[bit_user]

You can't cut your way to prosperity, but 8 layers deep is insane

Depends on whether it's typical or more of an outlier. As an outlier, it's not unreasonable for a 100k person company that includes manufacturing and R&D in multiple countries and involving products intended for multiple industries. There tend to be organizational boundaries that coincide with these geographic, market, and functional splits.

violates my 5 max rule with 3 being optimal for non-mega companies.

What's the largest team you've personally been a part of, over a span of multiple years? If you have managerial experience, what's the largest team you've personally managed, again over a span of multiple years? What kind of work were your direct reports doing?

The reason I ask is that it's actually hard to effectively manage teams that are too large. If the typical org chart depth is 5, for a company of 100k, that means the typical team size would be about 10 people. That's usually realistic.

Now, if we take a company like Walmart, with its 2.1M employees, then a 5-deep org chart would mean the typical manager must have about 19 direct reports. That's pretty nuts.

 

[beyondlogic]

intel is got a rats nest of CEOs leading the helm and until that changes the company doesn't have a chance.

 

[bit_user]

Not so long ago, Intel laid off at least 15,000 people. And then it received a nice $10 billion subsidy.

so in past half yr they have cut 1/5th of their size....they shouldnt get chips funding with that massive amount of cutting.

They're unrelated. CHIPS was about helping Intel finance new fab construction. If they don't hit their construction milestones, they don't get the money. They can't just pocket it and walk away. And if they make a windfall profit, some of it gets clawed back.

So why not, instead of giving money to the rich, build public factories?

CHIPS was about accelerating investment in domestic silicon supply chain. Maybe you recall the Great Chip Shortage of 2021-2022? Well, if access to certain factories in Asia gets cut off, then it's going to make that supply-chain shock look like a walk in the park. That's why we decided to invest in developing more domestic capacity. Some of the money also goes to R&D, because it's also a problem if only Taiwan is developing leading-edge technologies.

BTW, all countries that currently have leading-edge or rapidly-developing semiconductor manufacturing have large amounts of public funding going into the sector. CHIPS was the US finally waking up to the fact that we need to pay to play.

Selling products to the population without profit. And if we sell abroad, a small profit could exist for maintenance and paying employees' salaries. No one would earn millions a year.

If you want to experiment with alternate schemes of production, that's one thing. However, maybe don't try such experiments on vital industries. If you find a model that seems successful, then we can try scaling it up and applying it to more critical parts of the supply chain.

And in any case, money is not necessary to live; all that is needed is natural resources and their equitable sharing among the people living in a given territory.

Natural resources are not distributed evenly. That's part of what drives the global economy.

 

[bit_user]

I think the way to go many times is to support nonprofits over for-profit companies. A nonprofit wouldn't take subsidies and grants and use them to pay off their shareholders while laying off workers and cutting pay/benefits like a for-profit company would, they'd use them as intended.

LOL, a lot of hospitals are "nonprofit". Their executives sure are well-paid, though.

I do wish we'd go back to having higher taxes on short-term capital gains. I also think the criteria for dividends should be more strict. Intel wasted a lot of money on share buybacks and dividend payments that it could've been investing into R&D + fab buildouts.

I'm not totally against dividends, however. I just think care must be taken that they don't end up mortgaging a company's future.

 

[bit_user]

This is the main problem with a public listed company where the people funding and running the business seeks nothing more than just filling their pockets. The CEO is just an employee that’s paid to run the company to bring in money. When you can’t bring in the money, the next option is to cut cost. Ultimately, they don’t own the company nor have the passion to make it successful.

Most of their compensation is in the form of stock shares and options. This gives them incentive to "add shareholder value" over the timescale that their shares vest (i.e. become available for them to sell).

In my ideal world, they would only get base pay + stock options. And those options would vest annually at 25% of the shares per year. The way a stock option works is that it's granted at usually the current market price, which is the amount you have to pay in order to "exercise" it. So, if the stock price didn't go up, then you can't sell it for a profit, making it worthless.

And at the end of the day, they still get paid handsomely when it comes to pay and golden handshake.

Yeah, these termination bonuses should also be highly discouraged. I've heard the average CEO tenure, at a fortune 500 company, is like 18 months. So, you need pretty substantial compensation and termination fees for competent execs to step up and put their head on the chopping block. However, they've definitely gotten inflated beyond what's really necessary.

 

[bit_user]

They have the line managers plus they have massive amounts of project and change management managers. They sit around in meetings without the actual end workers and talk about all their metrics and paper work but many times have no clue what they really are talking about. They depend on some report the employee is expect to produce so they can discuss it in a meeting. The tech guys would rather not sit in these meetings anyway but if you had a meeting with a single manager and all the tech guys it would go much better having them talk directly rather than going though multiple levels of bureaucracy

Yes and no. While the quality of information is usually better, by going direct to the line workers, it would hurt productivity too much for them to be in every meeting. A good manager will know enough about what they're doing and will ask them when necessary. A good manager also shields workers from interference, so they can focus on their own work.

 

[JamesJones44]

Depends on whether it's typical or more of an outlier. As an outlier, it's not unreasonable for a 100k person company that includes manufacturing and R&D in multiple countries and involving products intended for multiple industries. There tend to be organizational boundaries that coincide with these geographic, market, and functional splits.


What's the largest team you've personally been a part of, over a span of multiple years? If you have managerial experience, what's the largest team you've personally managed, again over a span of multiple years? What kind of work were your direct reports doing?

The reason I ask is that it's actually hard to effectively manage teams that are too large. If the typical org chart depth is 5, for a company of 100k, that means the typical team size would be about 10 people. That's usually realistic.

Now, if we take a company like Walmart, with its 2.1M employees, then a 5-deep org chart would mean the typical manager must have about 19 direct reports. That's pretty nuts.

In context of the article I was referencing engineering organizations. However, I've studied business and think that thin vertical structures could work with other businesses as well, the optimal size might be slightly larger, but I don't think it has to get extremely deep.

I've run several teams over my career for some very large companies some for smaller companies. The teams sizes varied from 4 to 30. For the 30 people it was for a very poorly run automotive company, I did the job for 3 years, the team fluctuated up and down but 30 was the average. 2/3rds of the team was offshore resources which made it a 24 hour job largely, not to mention all of the "cross-functional" teams that one interacted with daily. When I was a director of engineering (software) at a very large fortune 500 company for 6 years before going it on my own and consulting. People load depends on the project and how it's run. When I was a director I had 6 different managers under me which each operated a different products with in the portfolio. Those teams were often 8 to 15 people each. Those managers often had a lead engineer, lead QA and lead designer that helped with duties, but did not have direct reports. Above me was a VP and the CTO. This company did everything from engines of various types, water filtration, energy transmission and distribution equipment and software, etc. I was a director in their energy software group which was very vast in what it did. No where in the company was I aware of an 8 layer deep management chain, but it doesn't mean it didn't exist somewhere. It was deeper in some segments, field engineering management who we worked with in a segment of software comes to mind, but even there, it was a more horizontal structure than vertical. Luckily this company preferred product focused management structures which likely lead more horizontal management alignments. A lot of software companies get into the business of non-product based structures having a managers/directors for the developers, a managers/directors for the project managers, a managers/directors for the QA team, a managers/directors for the UX/UI Design, etc. Then trying to throw a product/program owner into the mix which also has their own manager(s) which makes things a fragmented mess and leads to super deep structures with only a few people reporting to each manager which has sadly become common. I suspect this is what happened at Intel in some form or fashion.

In the WalMart case a lot of those 2.1 million employees are spread over 10000 ish different stores and various functions like WalMart Labs, Jet, Art.com, etc. The largest segment of employees comes from the physical store side, I can imagine you have a store manager who manages the internal logistics of that store, just like a plant manager would manage an assembly plant. A store manager for WalMart likely has things broken down over segments, produce, stock, product delivery, store to customer delivery, cashiers, etc. which all likely have their own manager. Each region likely has a manger and then their is probably and overall director for the regions. COO->Country (US, Mexico, UK, etc.) Brick and Mortar VP->Regional Manager->Store Manager->Store Function Manager->IC. This structure would be 6 deep which would be about 18 people per manager. If you wanted to break that up, one could argue inserting a VP over sub country spans or sub-regional manager or a sub function manger to thin it out to about 11 people per manager, but it's plausible and still only 7 deep. I doubt this is what WalMart's actual structure is, but functionally I believe either would be manageable for WalMart which has about 20x the number of employees of Intel who apparently was 8 deep in some levels.