GlobalFoundries Reducing The Staff

By the end of September, things were looking up for GlobalFoundries, as it ended the quarter with 22 percent more revenue than the previous year. In October, the company had more good news. At a press conference outside the massive Essex Junction facility attended by U.S. Senator Patrick Leahy, the company announced $30 million in federal funding to develop advanced chips. Ten days later, it won state approval to set up its own utility to save money on electricity.

Then, less than two weeks ago, a sudden swing in market forces led the global company to announce to its roughly 14,000 employees that layoffs were in the works.

The market gyrations and GlobalFoundries' surprise announcement left employees at the chipmaker in Vermont wondering if their jobs were on the line. Uncertainty comes as soaring interest rates appear to be affecting the Labour market. Last week, the Bureau of Labor Statistics reported that Vermont's unemployment rate rose slightly from 2.1 percent to 2.3 percent in October. It was the first increase since January 2021.

GlobalFoundries CEO Thomas Caulfield said in a video distributed to employees on Nov. 11 that the company will provide a more complete and comprehensive plan at a company-wide online conference at the end of the month. The meeting is scheduled for Dec. 1, two employees told VTDigger.

Employees received the video days after Caulfield touted the company's stellar third-quarter performance in a call with Wall Street analysts. In that call, he also warned that the company would have to start cutting costs as demand for semiconductors slowed.

The mixed messages were not lost on the company's employees in Vermont.

One employee at the Essex Junction plant said: "My colleagues and I are frustrated and annoyed because the company has been bragging about profits for the last two years and had to lay off staff during the first downturn."

The employee and another employee spoke to VTDigger on condition of anonymity because they feared reprisals for talking about their employer.

"Couldn't these huge profits be used as a bridge to keep knowledgeable employees on the payroll?" "Asked the first employee. "It seems like a very short-sighted decision and it feels insulting after all this talk of big money."

In the four-and-a-half-minute video, obtained by VTDigger, Caulfield delivers what he calls an "important and sobering message" describing the economic forces influencing the company's layoff plans.

The global company, which is based in Malta, New York and has a large facility in Essex Junction, has not described the scope of the cuts or how they might affect the size of the Vermont workforce. The company last week

Confirmed its plans in response to an inquiry from VTDigger. GlobalFoundries spokeswoman Gina DeRossi declined to comment further when asked to address employees' concerns.

In the video, Caulfield told employees that in the past four to six weeks, "we have seen an unprecedented shift in the near-term outlook for semiconductor demand."

One analyst who follows GlobalFoundries said there had been strong demand for semiconductors in data centers until recently.

"I think that's starting to come down," said Matt Bryson, senior vice president of research at Wedbush Securities. "Maybe that's why you're seeing a gradual decline in demand."

Also, because companies that sell consumer electronics are worried about a slowing economy, they have decided to run down inventories rather than place new orders, which could explain the sudden decline, Bryson said.

Caulfield said GlobalFoundries' customers "have seen their customers significantly slow down the rate at which they are placing orders with them."

With semiconductor demand sluggish, Caulfield told employees, the company needs to address its biggest cost issue: labor.

The company has imposed a hiring freeze, but depending on the depth and duration of the coming recession, it will have to "selectively reduce staffing in key areas of the business," Caulfield said.