Shares of GlobalFoundries (NASDAQ:GFS) opened lower on Monday. At one point, GFS stock was down 2.1% on the day, although it has since turned higher and is now trading in positive territory. News of GlobalFoundries layoffs have the stock tossing and turning today.
Last week, the company delivered a top- and bottom-line earnings beat, as revenue grew 23.5% year-over-year. More so, the company reported record margins and net income and provided a better-than-expected earnings outlook.
Despite the company recently reporting a strong quarter, GlobalFoundries layoffs are still on the docket. The company is “the biggest U.S.-based provider of made-to-order semiconductors.” However, it did not say how by much it would reduce its headcount or which division would be impacted.
During GlobalFoundries’ conference call, management said it was looking to decrease its annual operating costs by $200 million. Now it’s clear reducing its workforce will be a part of that plan.
Specifically, “The company Friday informed its employees of the impending workforce reductions, without disclosing when exactly they would occur or which divisions would be affected.”
What GlobalFoundries Layoffs Mean Now
The news comes after last week’s impressive rally, when shares gained 19.6%. It sent GFS stock to its highest level since March, although last week’s high of $66 was just 4 cents per share above the August high. In any regard, the layoffs come at a tough time in tech.
Not only are chipmakers struggling with falling demand, but tech companies in general are going through a slowdown in hiring.
Recent reports cite Amazon (NASDAQ:AMZN) looking to slash 10,000 jobs. That news comes just days after reports that Meta Platforms (NASDAQ:META) is axing 11,000 jobs. Intel (NASDAQ:INTC) is on the list, too.
All of FAANG has either announced layoffs or a freeze in hiring. Countless companies within tech have also taken that step. When listening to the conference calls and going through the press releases, it’s also clear chipmakers are struggling. That includes not just Intel, but also companies like Advanced Micro Devices (NASDAQ:AMD).
Simply put, the overall jobs market is holding up quite well, as is the overall economy. But the carnage seen in growth stocks and tech stocks is starting to be seen in the underlying businesses as well. These companies are pulling in the reins and cutting costs and that’s impacting everyone — including chipmakers.
We’re seeing that now in various hiring freezes, and now in GlobalFoundries layoffs too.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.