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(Formerly Known As "The Intel Eliminati" - TIE)

Tuesday, October 23, 2018

Intel Corp.
The “Headless Chicken” Syndrome

We have a good reason to believe that Brian Krzanich (BK) resignation from Intel Corp. was a “Roger Stone” style diversionary PR stunt, chosen by the Intel Board of Directors to protect the stock price from negative effect of vacating the top executive position. While supposedly, BK resigned his position as CEO due to ethical violation of company rules, in reality, BK was responsible for significant blunders that kept sinking the company position as a leader of the semiconductor manufacturing business.

The fact that Intel has not filled the CEO position since June 2018, indicates one or more of these points:
  1. No reasonable candidate is willing stick their head in the mess that is left behind BK’s legacy.
  2. The Board of Directors is complicit in letting BK run the company unchecked for such a long time and any well qualified candidate who interviewed with the board, figured out that they will be working against the tide and without backup.
  3. The Board of Directors is aware that CEO replacement will not solve the problems that Intel Corp. is facing, because the problems are much more profound and involve general lack of trust within the organization. Consequently, they are only focusing on damage control and can live with an interim CEO who is “absolved” of long-term responsibilities.
  4. The U.S. economy is currently running in full swing. The Board of Directors is focusing on “making hay while the Sun is shining”. A new CEO, particularly one who comes from the “outside” may come up with demands for radical changes to the internal organizations and consequently put the current stock price at risk. It is likely that the Board prefers to maintain the status quo over any "revolutionary" actions.

Brian Krazanich replaced the late Paul Otellini as Intel Corp. CEO in May 2013. Although presenting himself as an “engineer” in practice, BK had a very short engineering experience and very quickly, after being hired as a “process engineer” (a manufacturing position) at the New Mexico Fab, he shifted to a management track, where the rest of his career at Intel Corp. was spent. Most of BK career growth took place as a manager at the Technology and Manufacturing Group (TMG), which operates the silicon manufacturing lines (known as the "Fabs"). BK had no background in circuit design, electrical engineering, systems engineering, or software engineering which together, create the actual IP value of today's computer systems products.

For many decades since its foundation, Intel Corp. held itself to high standards of transparency by keeping low overhead and sharing information with all of its employees. As part of this exercise of transparency, the company annually conducted an employee feedback study known as the Organization Health Survey (OHS). The OHS presented employees with a large number of questions, asking them to grade the company performance over a wide range of issues. The OHS goal was to give managers a realistic assessment of the efficacy of management practices. The results of the OHS were published and distributed to employees, as a matter of course, followed by a public discussion of the issues exposed by the annual OHS. As the late Paul Otellini used to say "OHS goal is to keep Intel Corp. management in tune with company employees".

In 2013 (the first year in which BK was the CEO), Intel Corp. "C-Suite" issued a message to employees that the pending, annual OHS will not be conducted for that year. This was supposedly, because BK was in his position for less than a full year. This was the first time that the OHS was not run, since inception of the practice at Intel Corp.

In 2014, though the OHS questioner was distributed to employees on time, executive management refused to publish the OHS results for the first time in the history of the company. The only points that were exposed, came out of the personal blog that Richard Taylor (head of Intel HR at at the time) published on Planet Blue, the internal employee social network. The major issues mentioned on that blog included the fact that the OHS revealed significant trust issues among corporate entities, as well as lack of trust between managers and technical leaders, serving within the same business units.

Since Richard Taylor’s blog was open to all employees, his comments about the OHS received a flood of comments and questions. Like other company employees, I contributed a few of these comments at the time. My comments specifically addressed the growing lack of knowledge and many times complete ignorance of significant technical issues on the part of company managers at all levels. I also mentioned the systemic diminishing of the authority bestowed upon technical leaders and the overt effort to cut their numbers in company ranks, while staffing a growing number of manager positions. At the time, we did not know that BK and his cronies were planning to lay off a large number of employees in 2015; however, in retrospective, it becomes clear that the ground work was already set for this action to happen.

Interestingly, the 2015 mass layoffs were heavily skewed to exclude managers, compared to employees in individual contributor positions. This fact is clearly demonstrated by the OWBPA report filed by Intel Corp. in June of 2015.

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2014 was the year in which during the course of my work as the systems architect of the Electrical Validation department, I had first row view of the 14nm process yield failures. Upon closer look and a thorough investigation I came to the conclusion that the systems used for engineering audit of the wafers coming out of the Fabs were ineffective for determining a cause-effect correlation. Establishing such correlation is a fundamental requirement for effective failure analysis and subsequent correction of mass manufacturing production flaws. While 20th Century methodologies were sufficient to monitor silicon defects and determine corrective actions for fixing silicon production flaws for many generations of Intel silicon products, it became apparent that these methods have reach their limit at the time that the last 22nm fabrication process (Haswell family of CPUs) was used at the Fabs.

Looking at the vast amounts of data coming out of the production monitoring systems, I was astonished to find out that no-one on the engineering side of the company, knew how to effectively use the collected data for proper analysis as well as how to apply the analysis towards fixing outstanding yield problems. Further, it was shocking to find out that most of the petabytes (millions of gigabytes) of data was never seriously examined or utilized. In fact, most of the collected data was  unfit and useless for engineering analysis. After years of inertia this revelation was the first indication of a systemic failure. A Laissez-faire approach to running a critical part of the business suddenly falling into obsolescence, mostly due to lack of scrutiny and common sense among managers.

In an effort to correct the situation I began working on an initiative to revise the procedures and the methodologies used for identification of root-causes in silicon wafer failures for the 14nm and the upcoming 10nm fabrication processes. In concerted cooperation with other engineering leaders I devised 21st Century methodology, specifically using “big data” and artificial intelligence techniques for collection, organization, and analysis of silicon wafer failure handling. The foundation for this framework became internally known as the INTELligence Initiative.

While it took a significant amount of time to educate and convince people that the methodology change is critical for success, a significant number of technical leaders within the engineering organizations at Intel Corp. became convinced that the new direction that I proposed is the right way to go. Further prototyping and application of the methodology were applied to real-life data demonstrating significant success. The only objections, came from high level managers, who had no technical background and were risk averse. The message that I received at the time was “go ahead and implement your solution, if you are successful, we will support you...”.

The INTELligence Initiative and all the process improvements that I was leading at the time, went on the chopping block after the 2015 mass layoffs. C-Suite executives enjoyed their bonuses at the end of 2015 and the orchestra continued to play while the boat was sinking.

Though my immersion in the analysis of the 14nm production problems allowed me to understand the depth of trouble that hat the company was in, I was still convinced that commonsense would prevail and the new methodology would be adopted to help the recovery process. Now, four years later, I see that the common sense never floated to the top, because the Intel Corp. organization became increasingly dysfunctional, year after year.

It is now the end of 2018, BK is no longer the CEO, many thousands of experienced Intel Corp. employees had been permanently laid off in 2015 and 2016 and most of them do not wish to ever return to employment with Intel Crop.

Let us do a reality check as of end of October 2018:
  • BK received the dubious credential of being the “First Intel Corp. CEO to Break Moore’s Law”, an attribute that he certainly worked hard to earn...
  • BK appointed more Vice Presidents during his tenure as CEO, than any one of his predecessors. The question remains open: "What does the company have to show for this generosity?"
  • Intel Corp. has trouble finding competent people who are willing to work for the company, due to its diminished reputation as a fair employer.
  • The employee trust issues that were revealed in the 2014 OHS have never been attended to and the employee scare tactics, subsequently employed by BK for more than four years, further eroded chances of repair.
  • Intel Corp. sustained tremendous production yield problems with its 14nm silicon production processes while other semiconductor manufacturers, including Global Foundries, TSMC and Samsung proceed to offer reliable 14nm, 12nm 10nm and 7nm products.
  • Intel lost its place as the number one semiconductor manufacturer in the world, more than likely, forever.
  • AMD business success due to its reliance on external Fabs is capitalizing on Intel Corp. failure to lead in manufacturing technologies and product intellectual property development.
  • While still fighting yield problems with the so called “mature” 14nm process current industry news give the impression that the 10nm silicon manufacturing process will never see the light of day, due to both technical and economical factors.
  • Apparently the pressure on the limping 14nm production process is so bad that Intel Corp. is moving the system integration “Chip-set” parts back into the older 22nm production line.
  • Intel Corp. began selling assets, to offset losses. The latest such action is apparently, the sell off of the memory business, back to Micron Technology, for $1.5 billion
My analysis is that Intel Corp. is facing a plethora of technical problems that are real. However, the overwhelming problem for the company is the presence of incompetent management at all levels, in addition to lack of trust and cooperation inside business units and absence of leadership direction. The current production yield problems are only a symptom of the underlying organizational weakness and lack of leadership resolve. I define this phenomenon as the “headless chicken syndrome”.

--Dr. Flywheel

Friday, June 22, 2018

MF Intel CEO Resignation Raises More Questions

Recent news regarding about Intel Corp. CEO Brian Krzanich informed the public that BK resigned from his position, voluntarily. In view of of the company's record while under the tenure of BK, we believe that this "surprise" resignation was due to multiple factors and was a lot more predictable than not. The "fraternization" charges seem to be a PR solution that was devised to cover up for much more material misdeeds on the part of the beleaguered CEO.The swift way in which the event was announced and executed, indicates that Intel Corp. is doing its best to put maximum distance between BK and the company, more than likely because more serious revelation are about to see the light of day, very soon.
  • So far we know that multiple law suits have been filed against Intel Corp. as consequence of the multiple security flaws, found inside Intel's advanced microprocessor architecture that have been discovered by outside security experts. These law suits will have potentially detrimental effect on the company's revenue stream.
  • We know that the Federal Government is actively investigating Intel Corp. for illegal workforce manipulation and age discrimination charges. According to our sources, this investigation has been significantly expanded in recent months. The results of this investigation, which is already more than two and a half years along the way, are bound to be significant, both in terms of company image and monetary cost.
  • BK himself is facing investigation regarding his sale of millions worth of his stock options, while having first class access to propriety information, regrading the severity of security flaws in Intel Corp. microprocessor architecture and while being able to fully assess the corresponding risks to the company stock valuation.
  • The company's announcement that its 10nm manufacturing will not bear fruit until later in 2019, serves as a clear indication that something is awfully wrong with with the way that the company operates. Industry veterans, including myself, assess that the execution problems are not purely technical in nature, but rather have lot to do with chaos within the ranks, due to absence of leadership and expertise. Intel Corp. lost many highly experienced employees due to laying off about 1200 employees in 2015 and 12,000 in 2016, besides forcing thousands of veteran employees to retire. Apparently, the payroll savings in prior years are now costing a fortune in reduced productivity and chaos within the company ranks. To be fair, Intel Corp. annual reports, published over the last few years, stated the risks that such layoffs might bring about; however, management under the leadership of BK decided to take the risk, nevertheless!

It seems like the issue of fraternization, could have been handled with finesse, should BK's functional value in the eyes of the Board of Directors, was in order. The Intel Corp. PR machine could have come with subtle declarations and very little fanfare (like announcing a transition period for the CEO). Such was the case in the past when company executives were involved in quandary of various sorts. Typically, they were put to pasture (or sent to Siberia...) for a few months before quitting their job. Switching titles between President, President Emeritus, and CEO, was also common tactic to contain such moves. However, BK, more than any other Intel CEO before him, positioned himself at the center of a large number of PR campaigns and public personal appearances, in a self-promoting campaign that could only be described as a Trumpian Parade. Apparently, seeking the lime light came home to roost, when the Board finally decided to cut their losses with BK. Undoubtedly, the resignation came as a result of the mounting public scrutiny regarding company performance and dismal growth predictions, relative to the position of Intel's industry competitors. For the Board this is a matter of facts speaking for themselves and not of a sudden puritan morality campaign.

In spite of admitting to the shortsightedness and the missed opportunities in the smart phone ("mobile") market, switching to other sources of revenue to replace the PC market derived income, the company execution remained very slow. Instead of demonstrating true leadership by example, BK elected to run the company as a dictator, eject many of his coworkers whom he viewed as competitors and laid off tens of thousands of experienced employees from the company. Through the course of this process BK demolished the internal, productivity culture that was known until then as "Intel Culture".

Generally, Intel Corp. under the leadership of BK traveled through a process of organizational collapse ever since BK became CEO in 2013. The latest revelations about production line failures and inability to deliver 10nm high volume products, is a symptom of such organizational collapse. Intel Corp. rapidly lost it position as the world's leading semiconductor manufacturer to Samsung and its fledgling merchant Fab business never took off in a substantial way.

BK demonstrated significant lack of trust in in the company's human capital, particularly veteran company employees, a fact that is proven by the following points:
  • In his first year as CEO, BK blocked the publishing of the annual Organizational Health Survey (OHS), a survey in which employees provided their feedback about declared organizational goals and related management actions. This blocking of material information from employees, raised a lot of discontent among the rank and file within the company, since such a move has never happened before and clearly demonstrates a lack of transparency. BK never provided employees with an acceptable answer for his move.
  • BK drove the company to layoff tens of thousands of veteran employees and forced additional thousands of experienced employees to retire. No attempt was done to invest in employee retraining or reassignment. At the same time that Intel Corp. laid off a massive number of employees, the company also recruited an equal number of inexperienced new employees with foreign citizenship, many of them through H1B visa sponsorship and F1 to OPT conversions. This resulted in vacuum within the ranks, due to shortage of experienced leadership and a complete decimation of the "Intel Culture", a culture of taking responsibility, effective problem solving and operating with open communication and mutual trust. Newcomers, many of them recently arriving from countries that are not compatible with "Intel Culture", had no means to learn and follow by example, because the ranks were void of the older and experienced employees.
  • Due to his perceived notion about difficulties in managing the lower ranks, BK elected to invest tens of billions of dollars, into purchasing two outside companies, Altera and MobilEye for ridiculously overpriced valuations. The jury is yet to decide if these purchases were justified in any way; however, through this approach, BK's disdain to take charge and lead his own employees became apparent.
  • In 2015, BK declared the 1200 employees who were laid off by the company as "Lowest Performers". He did this in an open forum of employees, which created an enormous uproar inside the company. No attempt was made to correct the statement or apologize to the employees. Instead, Intel Corp. banned these employees from being rehired for their lifetime.
  • While trying his best to inflate his PR image, BK painted himself as a champion of female participation in the workforce. In January 2015 he announced that the company will spend $300 million on a new “diversity in technology” initiative. He also appointed his alleged girlfriend Danielle Brown, who was once his "technical Assistant" as the company "Chief Diversity Officer", a position that did not exist until then. Suspicious graft? You decide. Interestingly enough, the 1200 employees who were laid off in July 2015, received along with their "pink slip" a message from CEO BK, declaring that their layoff was called for due to the need to save $300 million, supposedly due to forecast of flat revenue. So it seems like BK was determined to promote his PR agenda by arbitrarily laying off veteran employees, and replace them with "diversity candidates". This would have been perhaps acceptable, besides that many of the women hired were foreign citizen spouses of H1B visa holder workers who stayed in the U.S. under H4 visas. So much to serving equality in diversification. According to the Economic Time of IndiaMore than 90% of such spouses are Indians. According to a recent report of the Migration Policy Institute, the US has issued EADs to more than 71,000 spouses of H1B visa holders, as of early 2017.
Workforce manipulation shenanigans and publicity stunts for hiding self serving nefarious agenda will remain the characteristics of Brian Krzanich career at Intel Corp., as well as his unique legacy of being the first Intel CEO to break Moor's Law. Though BK PR blurbs attempt to present the person as an "engineer" who runs a large technology company, people that knew BK at the beginning of his Intel career, told me that Brian had a very short stint in chemical engineering at the Albuquerque Fab, after which he immediately became a manager. Most of his time at Intel, BK spent at promoting his career, managing people and organizations and NOT doing actual "engineering" work. This could explain, at least in part, why real engineering and organizational problems are plaguing Intel Corp. as of late, since the CEO was probably not being able to understand what was broken in the system and what was necessary to fix it, while his personality prevented him from seeking good advice from either inside or outside the company.

Tuesday, June 5, 2018

Student Loan Debt Reached All Time High of
in Q1 of 2018

Student Loan Debt Reached All Time High of $1,521,019,350,000 (more than 1.5 Trillion dollars)  in Q1 of 2018. Consequently, outstanding student debt currently exceeds auto loan debt ($1.1 trillion) and credit card debt ($977 billion). Considering that 42% of people who've gone to college took out debt, this number has high significance on the future of our economy and the future welfare of young families. According to the College Board, "In 2015-16, the 60% of bachelor’s degree recipients from public and private nonprofit institutions who borrowed graduated with an average of $28,400 in debt"

A recent FRB Board of Governors (FRB-BOG) report on the Economic Well-Being of U.S. Households in 2017, published in May 2018 informs us about the student debt situation:

Over half of college attendees under age 30 took on some debt to pay for their education. Most borrowers are current on their payments or have successfully paid off their loans, although those who failed to complete a degree and those who attended for-profit institutions are more likely to have fallen behind on their payments. • Among those making payments on their student loans, the typical monthly payment is between $200 and $300 per month. • Nearly one-fourth of borrowers who went to forprofit schools are behind on their loan payments, versus less than one-tenth of borrowers who went to public or private not-for-profit institutions.

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As the table below shows, many families have taken debt to finance education of their children and/or grandchildren. This creates a "spillover effect" on debt ownership that continues to burden older adults, even after their offspring have become independent adults.

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Here are some interesting anecdotes quoted from the same FRB-BOG report:
  • Nearly 25 percent of young adults under age 30, and 10 percent of all adults, receive some form of financial support from someone living outside their home.
  • Four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money. This is an improvement from half of adults in 2013 being ill-prepared for such an expense
  • Over one-fifth of adults are not able to pay all of their current month’s bills in full.
  • Over one-fourth of adults skipped necessary medical care in 2017 due to being unable to afford the cost
  • Nearly half of adults age 22 and older currently live within 10 miles of where they lived in high school, but those who have moved farther from home are more likely to be satisfied with the overall quality of their neighborhood.
  • Out-of-pocket spending for health care is a common unexpected expense that can be a substantial hardship for those without a financial cushion. As with the small financial setbacks discussed above, many adults are not financially prepared for health-related costs. During 2017, over one-fifth of adults had major, unexpected medical bills to pay, with a median expense of $1,200. Among those with medical expenses, 37 percent have unpaid debt from those bills. In addition to the financial strain of additional debt, over one-quarter of adults went without some form of medical care due to an inability to pay.
  • Those with less income are more likely than others to forgo medical care due to cost. Among those with family income less than $40,000, 39 percent went without some medical treatment in 2017. This share falls to 25 percent of those with incomes between $40,000 and $100,000 and 9 percent of those making over $100,000.
  • Over the past several decades, the rate at which Americans move—both short distances within states and longer distances across the country—has steadily fallen. This reduction in geographic mobility also fits within a pattern of less job switching, more generally, or reduced labor market fluidity.
I highly recommend reading the full FRB-BOG report for those of you who are concerned about the future of our economy and the welfare of our general population.

All the best,



Saturday, May 26, 2018

The Federal Government is Investigating Intel Corp.
for Age Discrimination Violations

Recently published articles in the Wall Street Journal and the Oregonian web site, report that the Equal Employment Opportunity Commission (EEOC) is conducting an expanded class-level investigation regarding age discrimination complaints that have been filed with the EEOC against Intel Corp.

The Wall Street Journal (WSJ) was the first news organization to report about the ongoing investigation in an article written by Georgia Wells, entitled: Intel Faces Age-Discrimination Claims. The WSJ article mentions that multiple complaints have been filed with the EEOC in conjunction with several rounds of massive employee layoffs over the last three years. The fact that the EEOC would continue an investigation almost three years after a reported violation indicates that the reported allegations are substantial, in spite of Intel Corp. denial of the charges.

The Oregonian news organization expands the coverage on the subject matter in an article written by Mike Rogoway entitled: Intel under investigation for alleged age discrimination. Rogoway, who covered the Intel Corp. massive employee layoffs back in 2015 and 2016 also provided statistical charts showing a clear correlation between an employee age and their odds of being selected for layoff. In this recent article, Rogoway provides a copy of a previously published chart from 2016, demonstrating the very clear age discrimination factor in the 2016 layoffs. Similar charts are available for the 2015 layoffs.

Intel Corp. 2015 Layoffs (click on image to enlarge)

Intel 2016 Layoffs (click on image to enlarge)

Publicly available information also demonstrates that while Intel Corp. was laying off thousands of its current employees, the company was actually acquiring new employees by the thousands. Many of these employees came in via Intel corp. sponsorship of H1B visas, H4 spousal work visas, "Green Card" sponsorship and F1 to OPT work permits. All of these additions to the workforce involve importation of foreign workers who are at the mercy of Intel Corp. for continued stay and employment in the U.S. In other words, Intel Corp. was actively replacing older workers with imported slave labor.

Intel Corp. Number of employees from Annual Report
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As can be seen from the above information, taken from the Intel Corp. 2016 Annual Report, The number of employees reported at the end of 2015 was 107,300, or about 600 more employees then reported in the previous year. However, since about 1200 employees were laid off mid-year, in July 2015, the the end-of-year number shown in the Annual Report actually represents a gain of 1800 employees relative to the previous year. This gain of 1800 new employees acquired before 2015 year end, contradicts Intel CEO's announcement to employees that the July 2015 were necessary to save on expenses "due to forecast of flat revenue"! Throwing experienced (and older) employees off the bus in order to replace them with cheaper newcomers, is the more likely explanation.

Similarly, in 2016, Intel Corp. laid off about 12,000 employees, yet the difference between the numbers reported for the end of 2016 are 106,00, thereby reflecting an effective gain of 10,700 employees  (106,000 - (107,300 - 12,000)) = 10,700.

Where did Intel Corp. acquire the replacement employees? According to a recently published Pew Research Center report: "By the end of the 2004-2016 period,  there were a total of 1,474,000 OPT approvals and 1,473,000 initial H-1B visa approvals".

Layoffs of older U.S. citizen employees not only manifests employment costs savings due their higher salaries, but also cuts on the cost of medical insurance expenses for a self insured company like Intel Corp. It is taken for granted that medical insurance costs tend to rise with the age of older employees and their dependents. If induction into employment of almost 3 million imported slave laborers in the high tech sector is not a significant economic factor in this lucrative sector of the U.S. labor market, what is? 

Intel Corp. attitude towards lowering the cost of labor led company management to commit law violations by conspiring, along with Apple, Adobe and Google to halt competition for employee recruitment in the Bay area and by doing so curbing potential employee pay escalation. The company was engaged in this practice for over a decade since 2001. Court records show that Intel Corp. was forced to settle its ill behavior with its employees, following a court ruling in 2013 (see United States District Court of Southern California - San Jose, Case No. 11-CV-02509-LHK).

Taking the significant risk of engaging in an anti-competitive illegal activity is a clear indication of the high priority that  company executives and the board of directors gave to curbing payroll costs. Clearly, Intel Corp. never refrained from its quest to curb employee compensation and was looking for every avenue to achieve its goals. The evidence points to systemic changes in the company's HR practices, enacted by company executives to get rid of older workers and replace them with cheaper workers. The 2015 layoffs, in which about 1200 employees lost their jobs, seem to be a small scale "experiment" that was meant to serve as a learning tool for company executives before executing the "magnum opus", the massive layoffs of 2016.

While Intel Corp. is not the only company to utilize the F1 to OPT loophole to circumvent the H1B visa quotas, utilization of such loophole is certainly one of the tools that the company utilizes to recruit cheap, captive workers. Public records show that Intel Corp. was the number one company to sponsor F1 to OPT foreign worker visas, with twice as many records registered as Microsoft corp. (see chart below).

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Both the WSJ and the Oregonian articles provide new exposure to issues that we have been covering in this web site for the last two years. We encourage our readers to refer to several of our previously published articles, including:
Further recent information regarding the ill practices that high tech employers are using to substitute older workers with cheaper workforce are covered by Peter Gosselin in these ProPublica articles:

All the best.


Sunday, May 13, 2018

The Cheap Labor Loophole
OPT is the Name of the Game

Over the last three years I have been looking at the systemic abuses of F1 visa to OPT conversions. OPT, which euphemistically stands for "Optional Practical Training" is one of the major loopholes that large tech employers are using to circumvent the H1B visa caps while recruiting cheap and captive foreign workers residing within the United States. This loophole facilitates major layoffs of older (and more expensive) domestic employees and subsequently, replacement of these employees with cheap (entry level) foreign employees, using the OPT program for stay/work visa extensions.

Recently, the Pew Research Center published a comprehensive report on the subject of F1 to OPT visa conversion program. This program, driven mostly through the lobbying efforts of large High-tech employers continues to increase in size, completely unchecked.  The Mercury News outlet published a summary of this report in the latter part of this week. As you can see from the article referenced below and the PEW Research Center report, taking advantage of the OPT loophole, has become a standard operating procedure for many high-tech companies. The number of F1 (student visa) holders converted to OPT has grown 400% between 2008 and 2016, as shown in the chart below.

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Note that foreign workers who remain in the U.S. under the OPT program, are effectively, "indebted workers". They are being paid low wages and they are totally dependent on the graces of their employer, to maintain their residence and work permit. This makes them "ideal" target for exploitation. Employers would simply be "stupid" to not take advantage of this loophole to reduce the cost of labor. In the meantime, older domestic workers continue to be laid-off in droves.

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As can be seen from the chart above, Intel Corp. is one of the top companies taking extensive advantage of the F1 visa to OPT conversion loophole. Actually, as the chart above shows, Intel Corp. is No. 1 on the chart, leading all the employers listed above, including Microsoft Corp.

Without a doubt there is a price to pay when a company only focuses on cutting expenses and gets rid of its more experienced (however, more expensive) workers. In the case of Intel Corp. there is no reason to guess where this executive management policy fails. The writing is on the wall for Intel Corp. has been there since the 2015 mass layoff. Recent news about the 10 nm production line failures (see references below) serve as indicators of much more substantial problems to come. The company's ability to execute has diminished significantly, following the 2015 and 2016 massive employee layoffs.

The Mercury News outlet covered the OPT stay/work visa conversions loophole in a recent article, which is mostly based of the Pew Research Center report.

This is a quote from the Mercury News article referenced below:

OPT has caught the attention of critics pushing for reduced immigration. John Miano, a fellow at the Center for Immigration Studies, called the 2008 STEM extension a “scheme” by Microsoft to “circumvent the H-1B quotas.” The program started out giving work-experience opportunities to foreign students but has since been “transformed into a full-blown guestworker program whose stated purpose is to provide labor to American business,” Miano wrote in a September blog post for the center

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Clearly, the numbers shown on the map above speak for themselves. It is difficult to come to any other conclusion other than that the OPT program is pandering to the interests of high tech employers, by supplying access to cheap foreign labor, at the expense of domestic workers.

The Pro Publica article: CUTTING ‘OLD HEADS’ AT IBM, covers the multitude of ways in which older employees in the high-tech sector are loosing their jobs to foreign workers, through a variety of legal loopholes and shenanigans committed by Corporate America.   

When we examine the growing trends in the high tech industrial sector, of laying off older employees and replacing them with cheap and indebted guest workers, it seems that the OPT program lost its original purpose and de facto, under the intense lobbying of big business, was transformed into a U.S. Government sponsored, older worker mass displacement program!

--Dr. Flywheel


Thursday, April 26, 2018

Quickie Update
Household Income not Keeping up with Debt

Household Debt Jumps as 2017 Marks the Fifth Consecutive Year of Annual Growth

The Center for Microeconomics Data latest Quarterly Report on Household Debt and Credit reveals that total household debt reached a new peak in the fourth quarter of 2017, rising $193 billion to reach $13.15 trillion. Balances climbed 1.6 percent on mortgages, 0.7 percent on auto loans, 3.2 percent on credit cards, and 1.5 percent on student loans this past quarter.

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In conjunction with the content of my previous article (See: Are We Heading Towards the Next Financial Crisis?), this update is, to say the least, very disturbing.

This trend shown in the chart above is alarming due to its consistency since about 2013. Note that the non-housing component is rising at a much higher rate than the component mostly attributed to mortgages. Stagnation of salaries alongside increase in the accrual rates of personal credit card debt as well as of student debt are major factors in this picture.

Considering today's very tight job market, this is an opportunity for workers to demand higher pay rate. The lower corporate income tax on corporations should facilitate accommodation of worker's demand for raises. The question remains open, whether an equalization of household income will actually take place, as a result of the tax changes in fiscal year 2018. Will Corporate America share their bounty with American workers and contribute to true growth of our economy.

All the signs are pointing to a different directions though namely, driving personal debt to much higher limits by easing off bank regulations, all while simultaneously, raising interest rates.

A certain businessman who declared bankruptcy six times in a row, yet rose to high economic and political prominence, is proving that everything is possible in America. However, for most of us, experiencing bankruptcy, even once is far too much. 

See also:

--Dr. Flywheel 

While the Orchestra is Playing
is Intel Corp. on a collision Course with the Iceberg

Intel Corp. (INTC) stock enjoyed a significant rise over the last year+. Today it stands at around $52.35/share, in spite of significant recent corrections in the equities market.

From the PR campaign that Intel CEO Brian Krzanich and his executive staff are running, investors could get the impression that it is smooth sailing, or even better, it is time to take a cruise to an exotic destination and enjoy the sunshine. If you are a short-term investor, perhaps it is time to consider selling your INTC shares and use the proceeds to finance the cruise of your life with your profits. However, if you are more concerned about long-term prospects of retirement, perhaps it would be wise to look at Intel Corp. odds of riding the waves of success, before committing to keep your stock for the long haul.

Note that the latest (2017) Intel Corp. Annual Report (10K) is listing quite a few potential perils on the way to paradise. These (verbatim from the 10K report) include, among other things the following items:
  1. Demand for our products is variable and hard to predict.
  2. Due to the complexity of our manufacturing operations, we may be unable to timely respond to fluctuations in demand and we may incur significant charges and costs.
  3. We face significant competition.
  4. Changes in the mix of products sold may impact our financial results.
  5. We are subject to risks associated with the development and implementation of new manufacturing process technology.
  6. We face supply chain risks.
  7. We are subject to the risks of product defects, errata, or other product issues. 

Intel Corp. is a major player in the global semiconductor business, though it is no longer the leading player (see: Does Intel Corp. PR Hype Truly Compensate For These Facts?). As such the company's exposure to all of the above risk points is very similar to other players in this field. However, for Intel Corp. the main risk factors, into both the near and mid-term future are the ones highlighted above.

Back in 2015, when I had close exposure to Intel Corp. the company already began the experimental R&D manufacturing of 10 nm processes. At the time, the Technology and Manufacturing Group (TMG) had a rosy expectation of driving 10 nm products into high-volume manufacturing, within two years. Note that at the time, Intel Corp was able to ship 14 nm products into the market place; however, with significant yield issues (note Broadwell). While Intel Corp. was able to overcome many of the 14 nm manufacturing yield problems over time, finding solutions to these problems came at a significant cost. Though this cost was really a manufacturing cost, it was actually covered in the books as R&D cost. This explains the rising R&D expenses, reflected in the 2015-2016 annual reports (21.9% and 21.5%, respectively).

While merchant semiconductor Fabs around the world continue to make progress with their smaller geometry high-volume manufacturing, Intel Corp. is essentially standing still. Why did the company stop at 14 nm processes, and continued to use the euphemism of "14+" and "14++" to indicate progress?

My guess is that Intel Corp. has no advantage in pushing its 10 nm process into high-volume manufacturing, due to massive failure of its advanced Fabs to produce the quality level required to show profit from its products, using this manufacturing process. Among other things, over expectations and over reliance on advancements related to EUV lithography, resulted in major disappointments on the executive level. This disappointment led to considerable slow-down of the migration to smaller geometry processes and cautionary fiscal investment in rigging the advanced Fabs.

The mere fact that Intel Corp. 10 nm products are absent from the market, three years after they were "promised", is a clear indication of things going wrong in the navigation path of the Intel Corp. cruise ship. Considering potential loss of Apple business as well as, item number 3 on the list ("competition") above, does Intel Corp. current sailing plan leading, sooner or later to a collision with the iceberg? 

Apparently I am not in a minority opinion on this subject.


--Dr. Flywheel

Wednesday, April 18, 2018

ADD Magic Cure - How the Economic Machine Works

My wife always blamed "Sesame Street" for our son's ADD problems. She kept claiming that  Sesame Street wired the brains of young kids who were watching the show, to expect stimulus and instant gratification in a series of five minute episodes. These expectations remained ingrained the brains of the show audience throughout their growing years and clashed with the monotonous, slow and disciplined, traditional school environment. So she claimed.

Rich vs. Poor - Social Tensions and Revolution

My kids are all grown up by now and able to support themselves very gracefully. However, I am always surprised by the fact that they are not at all interested in learning how our economy works. I am always frustrated with their lackadaisical attention when I try to explain to them how economic processes are working and how significant events are a result of pure economic cycles and do not, suddenly land out of the moon.

Four Ways to Reduce Debt Burden

Following the best tradition of American culture, I was constantly seeking to find the magic pill, that would alleviate my frustrations about communicating my messages about our economy to my kids. I believe that I finally found it. I am so excited about my revelations that I decided to share my finding with you.

United States Debt Burden Graph

The "magic pill" that I found is a wonderfully narrated and beautifully illustrated video presentation by investor, hedge fund manager, and philanthropist Ray Dalio. In this presentation Ray is able to explain all the basic principles that are driving the economies of the free world, in a simplified, yet not too simple way. As Albert Einstein was quoted to say:
Everything should be made as simple as possible, but not simpler

I highly recommend watching Ray Dalio's video presentation to all of you. Maybe you will be able to avoid the pain and the frustration of explaining essential information to your kids, by letting them watch.

The presentation can be found here:

All the best.

--Dr. Flywheel

Tuesday, March 27, 2018

Open Letter to Rep. Susan Bonamici

Honorable Congresswoman Bonamici,

With an estimated 70-80 million “baby boomers” entering retirement over the next 15 years, the U.S. economy will be forced to shift the tax paying burden and dig into the pockets of people who still work, to support the growing elderly population.

The subject that I am raising here is the common practice of age discrimination in employment. There is mounting evidence that employers are laying off employees who are older, under a variety of covers, while circumventing the Civil Rights laws of this country. Note that the definition of older in this case, is workers, who are 40 year old and older. This definition comes from our legal system, as represented by the Age Discrimination in Employment Act (ADEA) of 1967.

This issue of marking employees for potential layoff, once they reach the age of 40, is very serious. As a principal member of PDX-TIE.ORG, an organization that was originally created for the purpose of mutually supporting employees who were laid off from Intel Corp. since 2015. I know from my own personal experience, as well as from the testimonies of many of our members, that Intel Corp. discriminated against hundreds or perhaps thousands of older employees by either laying them off, or forcing them to retire. In fact I filed an official complaint with both the Oregon Bureau of Labor and Industry (BOLI) and the Federal agency in charge of enforcing fair employment practices, the Equal Employment Opportunity Commission (EEOC). My charges are currently being investigated.

A recent article published in Pro Publica, a highly esteemed investigative journalism web site exposed many of the practices that IBM Corp. used to get rid of its older employees and either replace them with less costly younger workers, or shift their jobs overseas. The relevant Pro Publica article is entitled CUTTING ‘OLD HEADS’ AT IBM and the article content can be found at: https://features.propublica.org/ibm/ibm-age-discrimination-american-workers/

Many members of our mutual support organization, PDX-TIE.ORG, once they read the Pro Publica article, immediately found corollaries and parallels between the way in which they were treated by Intel Corp. and the various nefarious methods that Intel Corp. dealt with older employees.

Since I have dedicated the last 2-1/2 years of my life to researching the growing phenomenon of age discrimination in employment, I found that affected employees, have very little support to plead their case and seek justice, because the current system is rigged up in favor of employers. Among other things, employment attorneys refuse to take representation of age discrimination cases under a contingency fee arrangement. Consequently, there are very few such cases, brought into court. After all, older employees who lost their main source of income, following their employment termination, are in a very bad position to spend large amounts of money on attorney’s fees. My own personal experience and the testimony of many of my colleagues, support this fact.

There are many more issues regarding age discrimination in employment that I would be happy to share with you and your staff.

Note that while discrimination on the basis of race, color, religion, sex and national origin is covered Under Title VII Protected Classes of the Civil Rights Act of 1964 (Pub. L. 88-352) Vol 42(2000e), age discrimination in the work place is specifically covered under the separate scope of the ADEA.

Federal (and many state laws) provide protection (at least on the books) to certain recognized Protected Classes, defined by the law as: Race, Color, Religion or creed, National origin or ancestry, Gender (sex), and Age.Yet, we find very few cases of age discrimination brought into justice due to weaknesses in application of the law, as compared with other types of discrimination in employment.

Lately, issue of equal pay and sexual harassment came to light in the news and began to wake up the public to the fact that these practices are in fact much wider spread than the public were led to believe. I contend that age discrimination in employment is much wider than many people recognize. I noticed that non of your news letters, sent to your constituency ever mentioned age discrimination in employment as an action item to be corrected via both public education and legislative action. I hope that your office will attend to this issue at the high priority that it deserves.

Let us not forget that aging is unavoidable, whether a person is black or white, male or female, gay or straight. Regardless of gender based pay equality issues, once a person find themselves out of a job, pay equality becomes moot.

Thank you for listening.

--Ron Tsur

Saturday, March 10, 2018

Does Intel Corp. PR Hype Truly Compensate For These Facts?

Under the leadersheep (...!) of Intel Corp. CEO Brian Krzanich, the number of PR conferences and press releases tripled or even quadrupled, compared to the number of same events under all of his predecessors. Although INTC stock has crossed the $50 mark in recent days, the question still remains, whether this stock price is truly based on fact, or perhaps the price inflation is just an artifact of the disproportionately overblown stock market bubble.

The jury is still out; however an interesting article in EE Times entitled:

Intel Needs New Strategies, ASAP

provides very significant facts, adding into the picture necessary to understand the reality of Intel Corp. business growth potential and its long term standing as a player in the highly competitive semiconductor market.

Read the full EE Times article, written by Sang-Yun Lee at this link:

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All the best!


Thursday, January 25, 2018