Intel Announces 10,500 Job Cuts

Intel Corporation announced today that it plans to eliminate some 10,500 jobs—almost 10 percent of its work force—in order to achieve almost $3 billion in costs savings by 2008.

The jobs cuts are part of a larger shakedown and restructuring effort within the company to reduce costs and make the company more competitive, thereby reclaiming market share (and profits) lost to rival AMD. Intel will take a $200 million charge in severance costs and other restructuring expenses, but says it expects eliminating the jobs will save the company $1 billion in 2006, $2 billion in 2007, and $3 billion by 2008. “These actions, while difficult, are essential to Intel becoming a more agile and efficient company, not just for this year or the next, but for years to come,” said Paul Otellini, Intel president and chief executive officer, in a statement.

Analysts have called for Intel to take drastic action to shore up the company’s eroding financial position, and the figure of 10,500 job cuts falls at the lower side of predictions that the company would be forced to eliminate from 8,000 to 20,000 workers. Intel says the job cuts will fall mostly in management, marketing (can anyone say “Viiv?”), and information technology roles, as well as through the sale of some businesses and attrition.

In 2007, Intel plans to expand the business areas in which layoffs occur as the company increases efficiency in manufacturing, streamlines its organization, and improves processes.

Intel says the job cuts are not to be focussed in any one region or location; on Monday, Malaysian press reported Intel planned to eliminate 2,000 position in an assembly, packaging, and testing facility.