Intel, having given a heads-up that it plans to let go 15,000 employees by year-end, has reportedly fired the first shot. According to Tom’s Hardware, the struggling giant has started issuing formal layoff notices to 1,300 employees at its Gordon Moore Park facility in Oregon.

The report notes that those who received the message would stay until next month before their positions are terminated.

Local media The Oregonian points out that the move affects about one in every 18 Intel employees in Oregon, where the company is the largest private employer. To be more specific, the layoffs will impact more than 5% of Intel’s workforce in Oregon, marking one of the largest mass layoffs in the state’s history.

It is worth noting that these figures don’t account for employees who accepted voluntary severance, buyouts, or early retirement packages, according to Tom’s Hardware. With Intel’s Oregon workforce standing at around 22,000, a 15% reduction would bring the total down to fewer than 20,000, the report says.

And more bad news may be around the corner. The report by Tom’s Hardware also indicates that the 1,300 layoffs represent less than half of Intel’s overall reduction target. Therefore, if Intel applies these cuts evenly across its workforce, the total number of employees leaving, whether voluntary or involuntary, could exceed 3,000.

Moreover, Intel’s Sales and Marketing Group (SMG) may be another hardest-hitting sector, as it is reportedly facing a 35% reduction in costs, according to Tom’s Hardware.

After its August earnings call, at which Intel reported a net loss of USD 1.6 billion for Q2, 2024, the company has been grappling to get out of the rut by a series of initiatives, including plans to cut approximately 15% of its workforce and suspend dividend payments starting in Q4, which are parts of Intel’s broader effort to implement a USD 10 billion cost reduction program.

In addition to the aforementioned efforts, Intel also tries to secure more external funding. The company is expected to receive an USD 8.5 billion direct funding grant from Washington’s CHIPS Act by the end of the year. Moreover, Intel confirmed a separate USD 3 billion award for its Secure Enclave project, which will enable the company to supply its advanced 18A chips, according to its press release.

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• [News] Intel Employees Prepare for Layoff Notices as Cuts Enter Peak Phase This Week

(Photo credit: Intel)

Any suggestions for Samsung to get out of the rut? The remedy for its slow transformation may be hidden in the experience of Japanese peers. According to reports by Nikkei and Korea media outlet edaily, Samsung has begun researching Japanese companies, led by its Future Business Planning Division.

Citing Nikkei’s report on October 16^th, edaily notes that Samsung’s Future Business Planning Division, which is directly under the charge of Chairman Jay Y. Lee himself, plans to analyze the operations of 110 Japanese companies to study the decline and revival of the Japanese electronics industry. The main objective of the initiative is to identify and nurture business opportunities for Samsung, the reports suggest.

Notably, the research is said to include major tech firms such as Sony Group, which has gradually shifted its focus from hardware to content-oriented businesses like gaming, music, and film, edaily notes. Hitachi, a paradigm of downsizing its original business empire to focus on key growth areas instead, is rumored to be another research subject.

The reports indicate that Samsung’s Future Business Planning Division is gathering not only top employees from various divisions of the group but also individuals with business experience from outside, as it tries to “seek answers from the past for the future.”

Interestingly though, Samsung seems to be in the same shoes as its Japanese rivals a few years ago. Nikkei states that the South Korean tech giant surpassed Japanese companies in the semiconductor and television sectors, but now has found itself in a defensive position when being gradually caught up by Chinese companies, much like the situation Japanese firms used to get stuck in.

Samsung reported its third-quarter earnings last week. The company’s operating profit was initially expected to exceed 10 trillion won, but the actual performance fell short of that target. In terms of chip making business, it is lagging behind foundry giant TSMC due to unstable 3nm yield rates. Regarding memory business, SK hynix is claiming the throne of HBM amid AI boom.

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• [News] Lagging behind SK hynix in HBM, Samsung Plans Significant Year-end Cuts to Chip Executives
• [News] Samsung Foundry Faces Yield Struggles and Client Losses, External Push for Spinoff and U.S. Listing

(Photo credit: Samsung)

In September, Qualcomm was rumored to be investigating the possibility of acquiring parts of Intel’s design business to enhance its product portfolio, as it is reportedly interested in Intel’s PC business. Now a latest report by Bloomberg indicates that the smartphone chip giant might wait until after the US presidential election in November to make its decision.

Citing sources familiar with the situation, the report notes that Qualcomm hopes to seek greater clarity on the incoming president’s policies, as the new administration could significantly affect the antitrust environment and US-China relations.

The sources further note that Qualcomm may even choose to wait until after the new US president’s inauguration in January, 2025, to determine its next move regarding a potential Intel transaction due to the complexities involved.

The merger of the two tech giants would inevitably attract significant scrutiny from antitrust regulators globally, which includes China, as it is a crucial market for both, Bloomberg suggests. Therefore, it is understood that Qualcomm informally consulted with antitrust regulators in China to assess their position on any possible deal in September, though no response has been received, according to the report.

On the other hand, in the U.S. market, as Intel plays a central role in Washington’s strategy for revitalizing domestic chip manufacturing, political support would be essential for any potential deal, Bloomberg notes.

The report indicates that Intel is set to receive the largest share of funding from the 2022 Chips and Science Act, provided it proceeds with its factory construction plans. Qualcomm has been in discussions with US regulators and believes that an all-American merger could alleviate any concerns, according to sources familiar with the situation cited by the report.

It is also worth noting that submitting a bid after the election could provide Qualcomm with additional advantages, as it can wait until Intel to release its third-quarter earnings later this month, Bloomberg says. If Intel’s stock price continues to slide after its upcoming financial announcement, Qualcomm could benefit by getting a bargain.

According to the analysts’ projection quoted by Bloomberg, Intel is likely to suffer another net loss of over USD 1 billion this time around. The struggling chipmaking company reported a USD 1.6 billion net loss for the April to June quarter.

Representatives from Qualcomm and Intel declined to comment, and the State Administration for Market Regulation in China did not respond to requests for feedback, according to Bloomberg.

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• [News] A Quick Roundup of Intel’s Five Core Businesses: Key Moves to Watch Next
• [News] Arm’s Request of Acquiring Intel’s Product Division Has Been Reportedly Rejected

(Photo credit: Qualcomm)

As ASML accidentally released its financial report nearly a day ahead of its schedule due to a “technical error,” the Dutch semiconductor giant’s Q3 performance and its forecast for 2025 have also startled all by reporting orders at half of what the market predicted, raising concerns on the lackluster outlook of semiconductors despite strong demand for AI-related chips, according to the reports by Bloomberg and Reuters.

The result is regarded as a warning signal, as it might imply the weak performance for ASML’s major clients, such as tech heavyweights Intel and Samsung, the reports note. TSMC, another of ASML’s client, will release its Q3 earnings results tomorrow.

ASML shares plummeted 16%, marking their largest drop since June, 1998, the reports by Reuters and Bloomberg state.

Lackluster Q3 Bookings and 2025 Outlook as Customers Remain Cautious

ASML, known for producing the world’s most advanced chipmaking equipment such as High-NA EUV machines, posted a net profit of 2.1 billion euros on revenue of 7.5 billion euros (USD 8.2 billion) in Q3. However, it reported third-quarter bookings of €2.6 billion (USD 2.8 billion), falling short of the average estimate of €5.39 billion from analysts surveyed, according to Bloomberg.

According to its press release, ASML revised its 2025 total net sales forecast to a range of €30 billion to €35 billion, down from its previous estimate of up to €40 billion.

For next year, the company anticipates a gross margin between 51% and 53%, lower than the prior projection of 54% to 56%, mainly due to delays in the rollout of its high-end extreme ultraviolet machines.

According to a statement by ASML Chief Executive Officer Christophe Fouquet cited by the reports, the recovery of the semiconductor industry is progressing more slowly than anticipated, and this cautious outlook is expected to persist into 2025, leading to more conservative behavior from customers.

Key Clients in Trouble while Chip War Remains an Issue

It is worth noting that according to Reuters, ASML indicates that despite strong demand for AI-related chips, other segments of the semiconductor market are facing prolonged weakness. This has caused logic chip manufacturers to postpone orders, while memory chip companies are only planning “limited” expansions in new capacity.

According to a report from South Korean media outlet Business Korea, Samsung is said to mull to reduce its procurement of ASML’s next-generation EUV lithography equipment. Reportedly, Samsung initially planned to purchase more than three units of the next versions, EXE:5200, EXE:5400, and EXE:5600, over the next ten years. However, the company has now decided to introduce only the EXE:5200.

On the other hand, another struggling semiconductor giant, Intel, has secured five units of High-NA EUV machines from ASML to ensure its progress with the 2nm node, according to a previous report by TheElec. However, as the company has been doing its best to reduce expenses through restructuring and delaying overseas expansion, whether it will stick to the original purchase plan remains to be seen.

The report by Bloomberg also warns that while China was ASML’s largest market, the demand from China may slow in the coming periods, as Washington’s ongoing chip war with Beijing remains a persistent long-term concern for ASML.

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• [News] Intel Completes Assembly of Second High-NA EUV System, ASML Confirms
• [News] Samsung Reportedly Reduces Procurement of ASML’s Next-Generation EUV Lithography Equipment

(Photo credit: ASML)

A major collaboration between Taiwan and Japan on semiconductors has been halted, as PSMC suddenly informed SBI Holdings in late September that it was unable to proceed with the plan of constructing a fab in Japan as it had promised a year ago. With various speculations circulating concerning the reason behind, SBI Holding Chairman and CEO Yoshitaka Kitao has made his stance.

By harshly criticizing PSMC on his personal Facebook account, he accused the company of dishonesty, according to a report by TechNews.

Kitao referred to the breakup as “a blessing in disguise,” for the partnership has been terminated before any damage has been done, the report notes. He even quoted the saying of Confucius, a well-known Chinese philosopher, to express his disappointment in PSMC. ‘Without trust, one cannot stand,” he said.

According to Kitao, this is the first time SBI Holdings has had to dissolve a partnership almost unilaterally, even after making significant concessions.

According to TechNews, Kitao elaborated on his Facebook by saying that he and Frank Huang, Chairman of PSMC, had met with key government officials together, as well as providing a detailed explanation to the other party regarding the conditions for receiving subsidies from the Japanese government.

However, it is “unbelievable” that the Taiwan-based foundry company went back on their previous commitments and acted with extreme dishonesty, he accused.

According to a previous report by Nikkei, PSMC informed SBI Holdings in September that it was not willing to assume the risks linked to the project. As a result, the two companies will dissolve their partnership aimed at constructing the facility in Miyagi Prefecture in northeastern Japan, which was originally expected to begin mass production by 2027.

Nikkei also notes that PSMC has been struggling with mature nodes due to the oversupply from Chinese firms, resulting in operating losses for five consecutive quarters since Q2 2023.

According to TechNews, PSMC claimed that its collaboration with SBI would follow the Fab IP model, in which the former would provide consulting for the factory establishment, personnel training, and technology transfer, charging service fees and royalties to its Japanese partner, and it has no plans to invest in or lead the operations of the new factory.

Moreover, PSMC reportedly claimed that the subsidy policy of Japan’s Ministry of Economy, Trade and Industry (METI), stipulates that recipients must guarantee continuous production at the new facility for at least 10 years.

Given SBI’s background in finance and that it is without experience in the semiconductor industry, METI required PSMC to share responsibility for this guarantee, as PSMC claimed that being a publicly listed company in Taiwan, guaranteeing the operations of a Japanese factory without holding a controlling stake would violate Taiwan’s Securities and Exchange Act, TechNews notes.

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• [News] PSMC’s Frank Huang Explores Global Expansion through Fab IP, Diverging from TSMC’s Path
• [News] Taiwan’s PSMC Denies Rumors that Financial Troubles Caused the End of Partnership with Japan’s SBI

(Photo credit: PSMC)