Intel Faces Scrutiny Over Job Cuts While Competing for $20B US Chip Subsidy

Intel Corp INTC drew the Senator’s attention for its record downsizing plans despite being a contender for $20 billion under the U.S. Chips Act.

The U.S. subsidy clarified that it mainly aimed to create over 10,000 manufacturing jobs and 20,000 construction jobs for projects in Arizona, New Mexico, Ohio, and Oregon.

The U.S. conceived the strategy to reduce its dependence on its Asian counterparts, such as China, for semiconductor technology.

Therefore, Republican Senator Rick Scott questioned how many Intel U.S. employees would lose their jobs and how this would impact Intel’s planned semiconductor manufacturing investments, Reuters reports.

Last week, Intel disclosed Lip-Bu Tan’s departure from the board after close to two years on the mergers and acquisitions committee.

The departure followed Intel’s dismal second-quarter print. The company clocked a topline decline of 0.9%, trailing the analyst consensus of $12.94 billion. It also disclosed a $10 billion cost-reduction plan, including plans to slash headcount by over 15%.

In contrast, Nvidia Corp NVDA stands out with chief Jensen Huang’s strategy of retaining employees by rewarding them handsomely and making up for the demanding work environment.

Intel targets shipping chips for over 100 million artificial intelligence personal computers by 2025, including over 40 million in 2024. 

Intel stock plunged 43% in the last 12 months as the AI shift affected its PC and data center segments. Meanwhile, Nvidia gained 158% in the previous 12 months thanks to the AI frenzy.

Price Action: INTC stock traded higher by 0.25% at $19.66 premarket at last check on Thursday.

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