Intel decimates workforce

Chip giant Intel is slashing 10,500 positions worldwide following an in-depth internal analysis of the vendor’s structure and efficiency. The restructuring effort is expected to result in savings of US$2 billion in 2007 and US$3 billion in 2008.

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By  Stuart Wilson Published  September 6, 2006

Chip giant Intel is slashing 10,500 positions worldwide following an in-depth internal analysis of the vendor’s structure and efficiency. The restructuring effort is expected to result in savings of US$2 billion in 2007 and US$3 billion in 2008. The latest staff reduction at Intel follows an earlier announcement in July that the company would cut 1,000 management positions. Intel expects its global headcount to fall to 95,000 by the end of 2006 and decrease to 92,000 by the middle of 2007 — 10,500 fewer staff than the company had at the end of the second quarter of 2006. “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,” explained Paul Otellini, Intel president and CEO. The bulk of the job reductions planned for the remainder of 2006 are expected to occur in management, marketing and IT functions. The 2007 cuts are designed to improve manufacturing efficiency and improve equipment utilisation. Intel expects to incur some US$200m in severance costs as a result of the decision to cull 10% of its workforce. In addition to the US$3 billion cost and operating expense savings that Intel predicts the restructuring will produce, the vendor also expects to avoid capital expenditure of approximately US$1 billion through the better use of manufacturing equipment and space. Intel has come under increasing pressure from fierce rival AMD during the last two years. AMD made significant inroads into the server and workstation space and has now started building stronger relationships with major manufacturers such as Dell.

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