Despite federal subsidies, microchip maker GlobalFoundries plans job cuts, hiring freeze
GlobalFoundries is implementing a hiring freeze and plans to cut its workforce, company leaders told employees in a memo last week. It’s not yet clear whether job cuts will impact the company’s plant in Essex Junction, where it employs about 2,000 people, making it Vermont’s largest private, for-profit employer.
As Bloomberg first reported, the $35 billion computer chip company did not detail when or where job cuts may occur, but Gina DeRossi, a company spokesperson, confirmed to Vermont Public that GlobalFoundries is “taking a set of focused actions to selectively reduce our workforce.” In a call with investors last week, company leaders said they intend to cut $200 million in costs, as the semiconductor manufacturer expects inflation, rising interest rates and falling demand to impact its bottom line.
The news comes after GlobalFoundries reported over $2 billion in revenue in the third quarter of the year, a 22% increase compared to the same quarter of 2021. But the company sees tough economic times ahead, with softening demand for some of its products. As that demand decreases, company leaders told investors they specifically plan to cut back production of chips made on 200 millimeter wafers, which the company only produces in Singapore and Essex Junction.
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The company’s plans to cut jobs also follows a string of moves by federal and state officials in Vermont to support GlobalFoundries. Last month, Sen. Patrick Leahy announced a $30 million award for the company, which it intends to use to make equipment upgrades at its Essex Junction plant. Just a few days later, the state’s Public Utility Commission approved the company’s plan to create its own electric utility. That will allow GlobalFoundries to purchase power directly from the regional energy grid, a move the company has said will significantly reduce its costs.
In a statement, David Carle, Sen. Leahy's spokesperson, said the outgoing senator is concerned about "any workforce reduction news."
"These frustrating economic times have meant global demand issues everywhere, including in Vermont. But it is still difficult news to hear, especially with the holidays coming up," Carle said. "[Leahy] will continue to do what he can to support workers in Vermont to ensure that they have opportunities to continue to earn paychecks to feed their families."
GlobalFoundries is also anticipating that it will be the recipient of significantly more federal support in the coming months, as the Biden administration prepares to begin doling out $52 billion to the domestic semiconductor industry, stemming from the CHIPS Act signed into law in August. CEO Tom Caulfield has said the company intends to use some of that funding to make further upgrades at the 65-year-old Essex Junction plant.
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