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Tech layoffs in Southeast Asia grow as unprofitable startups extend runways



Shopee reportedly conducted three rounds of layoffs this year as its parent Sea Limited struggles towards profitability.

Lauryn Ishak | Bloomberg | Getty Images

More tech startups in Southeast Asia laid off workers this year, as macro headwinds widened losses and venture capitalists pushed startups to extend their runways.

Last week, online marketplace Carousell announced it was letting go of about 10% of its headcount — or approximately 110 positions.

In November, Indonesia’s GoTo Group — a merger between ride-hailing giant Gojek and e-commerce marketplace Tokopedia — cut 1,300 jobs or about 12% of its headcount.

Both companies cited challenging macroeconomic challenges.

There are signs that we are entering into a recession, if we are not already in one. Therefore, customer demand is likely to be slower in 2023.

They join Sea Group and other companies in the region in downsizing headcount. Sea Group, according to local media, laid off more than 7,000 employees over the past six months.

“Founders are being prudent by managing costs in this environment to ensure there is sufficient runway till late 2024,” Jia Jih Chai, co-founder and CEO of Singapore-based e-commerce brand aggregator Rainforest, told CNBC. Chai was previously a senior vice president at Carousell and a managing director at Airbnb.

“There are signs that we are entering into a recession, if we are not already in one. Therefore, customer demand is likely to be slower in 2023,” said Chai.

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In a note to Carousell’s employees, CEO Quek Siu Rui acknowledged “critical mistakes” were made. He said he was “too optimistic” about the Covid recovery and underestimated the impact of growing his team too quickly.

“The reality is that we were quick to grow our expenses and hire, but the returns took longer than expected,” said Quek, adding that there have been cost-cutting measures in the past few months and Carousell’s leadership will take voluntary pay cuts.

More sustainable growth

Quek also said it’s only prudent that the company get to profitability as a group as quickly as possible, as it is unclear if market conditions will improve.

Carousell posted a slower revenue growth of 21% in 2021 at $49.5 million, compared to a tripling of its revenue in 2020. Meanwhile, GoTo saw its losses swell from the January to September period.

“I was astonished that these companies predicted that the Covid behavior changes would last forever,” Alex Kantrowitz, a Silicon Valley journalist, who also runs an independent newsletter and podcast called Big Technology, told CNBC’s “TechCheck” Monday.

“Clearly, once you are allowed to go out to restaurants, hang out with friends outside, your usage of Netflix, Facebook, Shopify and Amazon would go down. So why do all of them build as if that would last forever?”

Tech companies only seeing beginning of layoffs, says Big Technology's Kantrowitz

“Previously, the companies were designed for fast growth. So there needs to be changes made when the organization is shifting from strong growth to sustainable growth. For example, you may not need too many marketing people if the budget is cut,” said Jefrey Joe, co-founder and managing partner at Indonesia-based Alpha JWC Ventures.

Tech startups in Southeast Asia are still largely unprofitable, with names like Sea Group and Grab amassing billions of losses annually.

Existing investors in the company are also actively advising founders to prepare for winter, Jussi Salovaara, Antler’s co-founder and managing partner for Asia, told CNBC. Venture capitalists are pushing founders to have a longer runway, he said.

Southeast Asia tech layoffs in 2022

Startup Employees affected
Glints 18% of total headcount
Sea Group 7,000+
GoTo Group 1,300
Zenius 200+
Carousell 110
Foodpanda 60
Carsome Less than 10% of total headcount
iPrice Group 50
StashAway 31
*this list is not exhaustive

Source: CNBC research

“We say to the founders that they need to be prepared that next year is not going to be easier than this year,” said Joe.

“These companies may be doing well operatively. They still have some growth. They might be close to profitability, but they need to make sure that they’re sustainable for the future,” added Salovaara.

Tech companies are only seeing the beginning of layoffs, said Kantrowitz.

Globally, tech companies have been conducting mass layoffs, especially the U.S. tech giants. For example, Meta cut about 11,000 jobs while Microsoft reportedly laid off less than 1,000 people due to a slowdown in growth.

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Goldman Sachs CEO David Solomon gets 29% pay cut to $25 million



David Solomon, Chairman & CEO of Goldman Sachs, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 23rd, 2023. 

Adam Galica | CNBC

Goldman Sachs CEO David Solomon will get a $25 million compensation package for his work last year, the bank said Friday in a regulatory filing.

The package includes a $2 million base salary and variable compensation of $23 million, New York-based Goldman said in the filing. Most of Solomon’s bonus— 70%, or $16.1 million, is in the form of restricted shares tied to performance metrics, while the rest is paid in cash, the bank said.

Solomon’s pay, while large by most any measure, is about 29% lower than the $35 million he was granted for his 2021 performance. Meanwhile, Goldman’s full year earnings fell by 48% to $11.3 billion, thanks to sharp declines in investment banking and asset management revenue, the company said last week.

While the bank was primarily hit by industrywide slowdowns in capital markets activity as the Federal Reserve raised interest rates, Solomon also faced his own set of issues last year. Goldman was forced to scale back its ambitions in consumer finance and lay off nearly 4,000 workers in two rounds of terminations in recent months.

Solomon’s pay package is smaller than that of rivals Jamie Dimon of JPMorgan Chase and James Gorman of Morgan Stanley, who were awarded $34.5 million and $31.5 million respectively.

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Fiji fires police commissioner and end security deal with China



Police operate a security check point in the Fijian capital of Suva in December following general elections. The Pacific island nation has played an important regional role amid competition between China on the one side and Australia, New Zealand and the United States on the other.

Saeed Khan | Afp | Getty Images

Fiji’s president on Friday suspended the commissioner of police following a general election saw the first change in government in the Pacific island nation in 16 years, after the military earlier warned against “sweeping changes.”

President Ratu Wiliame Katonivere said Commissioner of Police Sitiveni Qiliho had been suspended on the advice of the Constitutional Offices Commission, “pending investigation and referral to and appointment of, a tribunal.”

The Supervisor of Elections Mohammed Saneem was also suspended by the commission, the statement said.

Qiliho declined to comment to local media because he said he will face a tribunal over his conduct. He was seen as being close to former prime minister Frank Bainimarama, who led Fiji for 16 years before a coalition of parties narrowly won December’s election and installed Sitiveni Rabuka as leader of the strategically important Pacific nation.

The day before a coalition agreement was struck, Qiliho and Bainimarama called on the military to maintain law and order because they said the hung election result had sparked ethnic tensions, a claim disputed by the coalition parties.

The Pacific island nation, which has a history of military coups, has been pivotal to the region’s response to competition between China and the United States, and struck a deal with Australia in October for greater defence cooperation.

No more China policing deal

On Thursday, Fiji Times reported that Rabuka said his government would end a police training and exchange agreement with China.

“Our system of democracy and justice systems are different so we will go back to those that have similar systems with us,” the prime minister was quoted as saying, referring to Australia and New Zealand.

The prime minister’s office did not immediately respond to a request for comment.

Republic of Fiji Military Forces Commander Major General Jone Kalouniwai earlier this month warned Rabuka’s government against making “sweeping changes,” and has insisted it abide by a 2013 constitution which gives the military a key role.

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Inventory glut and underused factories



Intel CEO Pat Gelsinger, with U.S. President Joe Biden (not pictured), announces the tech firm’s plan to build a $20 billion plant in Ohio, from the South Court Auditorium on the White House campus in Washington, January 21, 2022.

Jonathan Ernst | Reuters

Intel’s December earnings showed significant declines in the company’s sales, profit, gross margin, and outlook, both for the quarter and the full year.

Investors hated it, sending the stock over 9% lower in extended trading, despite the fact that Intel did not cut its dividend.

The earnings report, which was the eighth under CEO Pat Gelsinger’s leadership, shows a legendary technology company struggling with many factors outside of its control, including a deeply slumping PC market. It also highlights some of Intel’s current issues with weak demand for its current products and inefficient internal performance, and underscores how precarious the company’s financial health has become.

“Clearly, the financials aren’t what we would hoped,” Gelsinger told analysts.

In short: Intel had a difficult 2022, and 2023 is shaping up to be tough as well.

Here are some of the most concerning bits from Intel’s earnings report and analyst call:

Weak and uncertain guidance

Intel didn’t give full-year guidance for 2023, citing economic uncertainty.

But the data points for the current quarter suggest tough times. Intel guided for about $11 billion in sales in the March quarter, which would be a 40% year-over-year decline. Gross margin will be 34.1%, a huge decrease from the 55.2% in the same quarter in 2021, Gelsinger’s first at the helm.

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But the biggest issue for investors is that Intel guided to a 15 cent non-GAAP loss per share, a big decline for a company that a year ago was reporting $1.13 in profit per share. It would be the first loss per share since last summer, which was the first loss for the company in decades.

An inventory glut

Dropoff in gross margin

Underpinning all of this is that Intel’s gross margin continues to decline, hurting the company’s profitability. One issue is “factory load,” or how efficiently factories run around the clock. Intel said that its gross margin would be hit by 400 basis points, or 4 percentage points, because of factories running under load because of soft demand.

Ultimately, Intel forecasts a 34.1% gross margin in the current quarter — a far cry from the 51% to 53% goal the company set at last year’s investor day. The company says it’s working on it, and the margin could get back to Intel’s goal “in the medium-term” if demand recovers.

“We have a number of initiatives under way to improve gross margins and we’re well under way. When you look at the $3 billion reduction [in costs] that we talked about for 2023, 1 billion of that is in cost of sales and we’re well on our way to getting that billion dollars,” Gelsinger said.

The not-so-bad news: Dividend and self-driving

Long-term investors have always closely watched how the company balances the near-term need to placate shareholders with the massive capital spending needed to stay competitive in the semiconductor manufacturing business.

If Intel is cutting costs and still needing to invest in chip factories to power its turnaround, analysts say it may want to reconsider its dividend. Intel spent $6 billion on dividends in 2022, but did not cut its dividend on Thursday.

Meanwhile, the company said it wants to cut $3 billion in costs for 2023 and analysts believe it wants to spend around $20 billion in capital expenditures to build out its factories.

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Gelsinger was asked about this dynamic on Thursday.

“I’d just say the board, management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners and we are committed to maintaining a competitive dividend,” Gelsinger replied.

There was at least one bright spot for Intel on Thursday.

Mobileye, its self-driving subsidiary that went public during the December quarter, reported earlier in the day, showing adjusted earnings per share of 27 cents and revenue growth of 59%, to $656 million. It also forecast strong 2023 revenue of between $2.19 billion and $2.28 billion. Shares rose nearly 6% during regular trading hours Thursday.

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