GlobalFoundries plans job cuts, hiring freeze amid record results – Times Union
This is a carousel. Use Next and Previous buttons to navigate
GlobalFoundries, which operates its Fab 8 computer chip factory in Malta, is planning job cuts and a hiring freeze amid poor “macroeconomic” conditions impacting the tech sector, according to Bloomberg.
Tom Caulfield, CEO of GlobalFoundries, left, joins U.S. Senate Majority Leader Charles Schumer, right, in calling for legislation that would block China’s semiconductor supply from entering the U.S. defense sector and boost state chip manufacturing on Tuesday, Oct. 18, 2022, during a press conference at Albany NanoTech Complex in Albany, N.Y. GlobalFoundries is reportedly looking at job cuts despite the federal help.
GlobalFoundries CEO Tom Caulfield, front center, celebrates with employees, board members and investors at the company’s $3 billion IPO last year at the Nasdaq stock market in New York City.
MALTA — Despite reporting record earnings last week, Saratoga County chipmaker GlobalFoundries is planning company-wide job cuts and a hiring freeze, contributing to uncertainty over if and when it will build a second factory in Malta.
GlobalFoundries, which employs about 3,000 people at its headquarters and Fab 8 computer chip factory at the Luther Forest Technology Campus, informed employees on Friday of the cost-cutting measures, first reported by Bloomberg news.
GlobalFoundries spokeswoman Erica McGill confirmed the plans Monday and said the reasons for the layoffs go beyond the company’s positive third-quarter results.
“On the heels of a strong third quarter with solid fourth-quarter guidance, we face rapidly developing uncertainties of the global economy, including inflation, continued elevated energy costs and rapid interest rate increases that are impacting our industry and GF,” McGill said.
GlobalFoundries will often refer to itself as GF these days as part of a rebranding program.
Last week, GlobalFoundries reported record revenues of $2.1 billion for the third quarter, an increase of 22 percent over the same period last year. Profit for the quarter was $336 million, another record for the company.
McGill did not say how the job cuts might impact the company’s employment in Malta. GlobalFoundries is in the process of selling its East Fishkill factory to Onsemi, an Arizona chipmaker that is paying $430 million for the facility and has offered jobs to all of the facility’s 1,056 employees.
“Based on the current macroeconomic environment, we are taking a very disciplined, proactive approach to contain costs and accelerate our planned productivity initiatives,” McGill said. “Like many in our industry and across the technology sector, we too are initiating a hiring freeze and taking a set of focused actions to selectively reduce our workforce.”
When GlobalFoundries issued its earnings report last week, it told analysts during a conference call that it was looking to shed $200 million from its annual expenses.
GlobalFoundries CEO Thomas Caulfield said at the start of the call that some customers have recently asked to “modestly adjust some of their 2023 shipments downward,” likely in the first half of the year.
“We are proactively taking actions to contain costs and to accelerate our previously planned productivity initiatives,” Caulfield said. “Though it is difficult to take these actions during a year of record output, we believe that taking these actions now enables us to continue to outperform the market regardless of the economic environment.”
During the conference call, GlobalFoundries Chief Financial Officer David Reeder mentioned the “smart mobile” device market as one sector seeking fewer chips due in part to an “inventory correction,” meaning the sector is seeing less demand for its products. Apple has seen lower-than-expected demand for its new iPhone 14, for example.
The chip industry is notoriously volatile and chipmakers will cut jobs and other expenses if they forecast difficult economic conditions due to the enormous costs of chip manufacturing. As a third-party chipmaker, GlobalFoundries makes chips for other companies, and so margins are relatively thin.
That’s why GlobalFoundries is moving so deliberately with its previously announced plan to construct a new factory at Luther Forest next to its existing Fab 8 factory.
Although GlobalFoundries can tap into $52 billion in federal government subsidies made available to chipmakers to expand in the U.S. through the recently approved CHIPS Act to build the new facility, Caulfield said no firm decisions have been made on whether — or when — construction would begin.
“From a GF perspective, we will not put capacity on without customers committed to that demand,” Caulfield said during the conference call.
In fact, Caulfield said that the company’s first priority under the CHIPS Act would be to apply for funding to expand Fab 8 in Malta and upgrade its Vermont chip factory — before it builds a second fab in Malta.
“The rate and pace at which we do it will be dictated by how quickly our customers are looking for us to create this capacity for them as they think about rebalancing their supply chains and bringing some of that product to the states,” Caulfield said. “I call it the $52 billion question.”
Larry Rulison has been a reporter for the Albany Times Union since 2005. Larry’s reporting for the Times Union has won several awards for business and investigative journalism from the New York State Associated Press Association and the New York News Publishers Association. Contact him at 518-454-5504 or lrulison@timesunion.com.