Intel, the world's largest chip maker, announced that 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.
The Santa Clara, CA, U.S.-based company said most of the job cuts this year will come from its management, marketing and information technology ranks, and will expand in 2007 to include manufacturing, design and other segments.
The cuts are expected to save the company U.S. $3 billion per year by 2008. Severance costs are expected to total $200 million.
"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, said Intel spokesman Chuck Mulloy.
The company plans to cut about 2,500 more jobs by the end of the year. The remainder will be shed in 2007, when Intel's head count will settle around 92,000, Mulloy said.
The latest cuts come after 3 months of streamlining. In June, the company said it planned to shed 1,400 jobs by selling a money-losing division that makes chips for cell phones and other handheld devices to Marvell Technology Group Ltd., which said it would absorb most of the workers in the $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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