Intel foundry employee here. What would be the consequences for employees? What’s the usual Broadcom strategy with acquired workforce? I know this is a bit of a specific area, but still. Peeps over at Intel all worry about their jobs, foundry guys more so given all the issues with the business.
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Why do you think Hock be interested in Intel Foundry business? It’s a very low margin business and needs lot of R&D money.
If Hock’s interested in Intel… that’s the enterprise processors design division. Qualcomm can take the consumer facing design group. I just don’t see Hock being interested in the Foundry business.
In any case, if he buys any of your group, you should expect massive layoffs and a year of restructuring.
Here is what you can expect as an employee, if your company is acquired by BC...
First, it's likely BC will substantially re-org your company as part of the integration. BC operates as a collection of isolated divisions, each with its own GM who is responsible for the overall P&L of that division. In the case of VMW, they broke the company into five divisions each focused around one of the five major product portfolios.
As an employee, you will fall into one of three categories: Stay, Leave or Transition.
+ Stay employees receive a written job offer to remain as a FTE at BC post-acquisition. In the case of VMW, most Stay offers were sent in the weeks before deal close. However in certain European countries Stay offers came later, due to local HR laws and regulations. As part of the Stay offer, they tell you your new role, title, manager and salary. Generally, your new role is at least 1 level lower than your previous role although I know of several people at VMW who were offered BC roles that were 2 levels lower. The salary and cash bonus were OK, but the RSU program puts things over the top. I'm not aware of any silicon valley company that offers such a rich RSU program for rank-and-file employees.
+ Leave employees are laid off, and are paid severance. The timing of layoffs varies around the world due to variations in labor laws, but generally BC lays people off as quickly as possible in each country. In the case of VMW, in the US there was a massive RIF the week the integration closed. (Aside --- there will also be continued ongoing more targeted RIFs in the months following deal closure, as the newly integrated business attempts to meet profitability guidelines. Layoffs happen all the time at BC.)
+ Transition employees are a relatively small group of people who are deemed important to support the integration effort, but who will not stay on as a broadcom FTE after that. Transition employees continue at the same base salary as they had been earning at the acquired company pre-acquisition, can continue to vest their RSUs, and qualify for a 50% transition bonus for every month of transition work performed before they leave. The transition offer letter also specifies the exact date when your role will end, at which time you receive full severance. In my experience, the length of a transition role varies --- during the VMW integration I knew of some people who were on a 3-month transition role, and others who were on a 10-month transition role. I also know of several people who, during their transition period, were asked to extend their transition roles.
The way decisions are made about who falls into each category, are made by YOUR senior leadership in the weeks leading up to the acquisition closing. Your senior leaders will be handed a headcount envelope for the post-acquisition organization, and then construct the list of which current employees fall into each category.
I recently went thru the BC acquisition & integration process with VMware. Overall, it wasn’t very pretty, but it was viciously efficient. Depending on your appetite for change, uncertainty and stress, you may want to start looking for a new job now because BC has a very harsh, cold culture and it’s almost certain there will be significant restructuring and RIFs as part of the integration. The upside is if you do manage to receive a “stay” offer and become a full-time BC employee, while the BC salary and cash compensation are OK, the stock compensation is at another level and you can earn significant upside from your RSUs as long as you don’t get laid off and can continue to vest. The downside if you do manage to receive a “stay” offer, is they will bust you down at least one level (ie if you were a Director at Intel, you’d become a Senior Manager at BC), there is strict mandatory in-office work policy, there are zero frills, and you will receive the scarcest of employee development or training opportunities. BC is ruthlessly run based on the P&L, as if it were a giant P.E. firm, and the moment your division falls short of financial targets rest assured reorgs and layoffs are right around the corner.
Best of luck to you.
Look at it like this… Hock plays the long, safe game. Having Intel Foundry protects chip creation when C invades T… once we unload SED that will free up space.
Just don't see it. Gut instinct is that this is a mad idea. The whole industry trend has been to fabless. And Broadcom has done very well from this - indeed the article raves about Broadcom's semi business gross margins, which it estimated at 70%.
Beyond this, I don't see how this moves the needle in competing against nVidia. If indeed that's a major concern for Broadcom. The competition vs nVidia is about a whole lot more than silicon cost and pricing.
Nor is it Broadcom's job to rescue Intel.
The UK press traditionally calls the summer holiday period "the silly season" since they used to need to dream up bizarre stories to fill up the slowest news period of the year. But we're back at school/work now ... and the stories keep coming (at least around Intel). It's disturbing that the cloud of uncertainty hovering above Intel keeps growing.
No one would touch it with a 10ft pole
Based upon past acquisitions (almost all of those were successful)… If Broadcom does buy it, expect major cost cutting, EBITDA margin to match up to Broadcom’s in ~couple of years, long tail of small customers will have handled by resellers, third parties & partners (only big accounts will be managed directly by Broadcom), typical silicon valley perks like WFH will be allowed only on exception basis. The business will become very profitable. Objectively, Hock Tan is one of the smartest financial minds in the tech, kind of like Warren Buffett for tech.
This is some stupid stock trolling.
If Intel can't make their out of date foundry business profitable, how would Broadcom possibly have a shot at it?