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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