The Hindu : Business : Intel to cut 10,500 jobs

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Thursday, Sep 07, 2006

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Business

Intel to cut 10,500 jobs

Management, marketing and IT ranks will be affected

SAN JOSE: Chip-maker Intel Corp. said on Tuesday it that would eliminate 10,500 jobs — about 10 per cent of its workforce — through layoffs, attrition and the sale of underperforming business groups as part of a massive restructuring.

The Santa Clara-based company said most of the job cuts this year will come from its management, marketing and information technology ranks, and will expand in 2007 to include manufacturing, design and other segments.

The cuts are expected to save the company $3 billion a year by 2008. Severance costs are expected to total $200 million.

The world's largest chip maker is fighting to reverse sinking profits and make it more efficient as it seeks to regain the market share stolen by smaller rival Advanced Micro Devices Inc (AMD).

"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,'' Chief Executive Paul Otellini said in a statement.

About 5,000 of the affected positions have already been cut or will be eliminated this year through a previously announced management layoff, the pending sale of two businesses, and attrition, said Intel spokesman Chuck Mulloy.

The company plans to cut about 2,500 more jobs by the end of the year. The remainder will be shed in 2007, when Intel's head count will settle around 92,000, Mr. Mulloy said.

Intel has been under intense pressure to unload money-losing divisions and halt the encroachment of AMD on its lucrative core business making the microprocessors that act as the brains of computers. Intel has been steadily losing profits and market share. Analysts have criticised it for reacting too slowly after AMD's 2003 launch of the critically acclaimed Opteron and Athlon 64 chips for servers and desktop PCs.

The latest cuts come after three months of streamlining.

Mr. Otellini said the current restructuring would be as expansive as the company's transformation in the mid-1980s, when it exited a business it helped create — making dynamic random access memory (DRAM) chips widely used to store information in computers — to focus on microprocessors.

That shift prompted one of Intel's largest rounds of layoffs ever, with the company eliminating more than 7,000 jobs, about 30 per cent of its workforce at the time. Since then, Intel has avoided large-scale layoffs. But the dot-com crash did prompt the elimination of about 11,000 jobs — largely through attrition and buyouts — in less than two years. — AP

India operations

Banagalore Special Correspondent writes:

Intel India at present has an employee strength of about 2,600 and its Bangalore operations include the largest number of Intel divisions in any country outside the U.S. But, company officials declined to comment on the exact number of job cuts at its Indian operations.

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