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Intel prepares to slash workforce

Chip-maker targets reduced spending in H2, leaked memo shows

Intel prepares to slash workforce
Intel has seen margins eroded by mobility trends.

Chip-making behemoth Intel is preparing for a broad slashing of its workforce this month, oregonlive.com reported, citing an internal memo distributed to managers.

The cuts are required to get costs under control so Intel can meet its projected revenues for 2015. The projections already show a drop in turnover and the chip-maker has reportedly seen disappointing sales in recent months. In April the company said it would cut its research and administration budget by $300m this year.

"We need to reduce overall spending for the second half of the year," the memo reads. "Some of this will come from reductions in employment and some from other spending cuts. Employee reductions will vary by business group."

Despite a strong performance in 2014, Intel has seen margins eroded by mobility trends. The company is set to acquire data-centre programmable chip specialist Altera for a reported $16.7bn, attracted by Altera's higher-margin business, as PCs, where Intel's chips most commonly reside, lose appeal with consumers.

The memo did not mention the number of job losses, but any cuts are likely to have a significant impact on the US state of Oregon, home to oregonlive.com's parent newspaper, The Oregonian. Intel employs around 106,000 worldwide, but 17,500 of these are in Washington County, Oregon.

The website reported: "No other business in Oregon employs that many, and no other company comes close to the chipmaker's economic impact on the state, with billions of dollars invested in leading-edge research factories in Hillsboro.

"Intel's Oregon headcount is currently near an all-time high, but total employment has fluctuated considerably in recent years, falling sharply when sales are down and rising rapidly when business is up."

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