Intel is making around 10,500 staff redundant across the
world as it attempts to cut its operating costs and improve
profitability.
The long expected move comes after the company made 1,000
managers redundant earlier this year and as it ramps up its efforts
to compete against smaller rival AMD, which is taking away market
share in all chip segments.
As a result of the restructuring, the company expects to
generate savings in costs and operating expenses of approximately
$2bn (£1.11bn) in 2007. In 2008 the company expects savings from
this restructuring to grow to around $3bn annually.
The savings are a combination of non-workforce related steps and
a significant reduction in Intel's workforce.
The company's employee population will decline to approximately
95,000 by the end of this year, resulting from workforce
reductions, attrition and previously announced actions, said
Intel.
The workforce will decline to approximately 92,000 by the middle
of 2007 – 10,500 fewer than the company's employee population at
the end of the second quarter of 2006.
In addition to the savings from the workforce reduction, the
company is targeting savings in merchandising expenses, capital and
materials.
“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 chief
executive officer.
Most job reductions this year will occur in management,
marketing and information technology functions, reductions related
to the previously announced sale of niche businesses, and
attrition.
In 2007, the reductions will be more broadly based, as Intel
tries to improve labour efficiency in manufacturing, and improve
equipment utilisation and product design methods and processes.
The company expects severance costs to total around $200m.
Figures for Intel’s third quarter are expected on 17
October.
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