Chip-maker Intel Corp said it will eliminate 10,500 jobs -- about 10 percent of its work force -- through layoffs, attrition and the sale of underperforming business groups as part of a massive restructuring.
Intel said on Tuesday most of the job cuts this year will come from its management, marketing and information technology ranks, and will expand next year to include manufacturing, design and other segments.
The cuts are expected to save rhe world's largest chip maker US$3 billion per year by 2008. Severance costs are expected to total US$200 million.
PHOTO: AP
The Santa Clara, California-based company is fighting to reverse sinking profits and make it more efficient as it seeks to regain market share stolen by smaller rival Advanced Micro Devices Inc.
"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, Intel spokesman Chuck Mulloy said.
Intel plans to cut about 2,500 more jobs by the end of the year. The remainder will be shed next year, when Intel's head count will settle around 92,000, Mulloy said.
Many analysts and investors were expecting higher job cuts and a better-defined strategy for dealing with problem business units, said Nathan Brookwood, analyst with research firm Insight 64.
"This is not nearly as deep or as broad a cut as many had anticipated," Brookwood said.
"They aren't talking about cutting back any substantial programs. They're saying, `We can still do everything we were planning to do, but now we can do it with fewer people,'" he said.
"And I'm not certain that's a workable plan," he 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 criticized 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.
In June, Intel said it planned to shed 1,400 jobs by selling a money-losing division that makes chips for cellphones and other handheld devices to Marvell Technology Group Ltd, which said it would absorb most of the workers in the US$600 million deal.
The next month, Intel slashed 1,000 management jobs to reduce layers between top executives and supervisors.
Five top executives were also reassigned to new positions, which the company said would simplify management and reduce the number of senior managers reporting to Otellini by two.
And earlier this month, Intel said it was selling its media and signaling business, which makes telecommunications motherboards and software.
About 600 employees were expected to be acquired by the buyer, Eicon Networks Corp, which bought the business for an undisclosed sum.
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