Layoffs Loom at Intel

Updated: The conclusion of Intel's ongoing efficiency review could lead to layoffs of 10,000 or more at the chip maker in September, reports say.

Intel is expected to announce internally the results of its efficiency review on Sept. 5, a move that could result in thousands of layoffs.

The chip maker, which has already made a series of sweeping moves as part of the review, could cap the action by cutting 10,000 or more jobs, analysts have said. The company has about 100,000 employees.

Intel began the review and restructuring plan in April following missteps that battered its quarterly financials, saw its inventories rise and caused its market share to drop. It has lost several points of worldwide x86 processor market share to its rival Advanced Micro Devices of late. CEO Paul Otellini, in discussing the review with analysts, pledged to leave no stone unturned in the action.

/zimages/4/28571.gifClick here to read more about Intels internal efficiency review.

Otellini, in an e-mail message to employees sent Aug. 31, said he will announce the results of the efficiency review during a company Webcast on Sept. 5, the New York Times reported on its Web site. "We have committed to report on our structural and efficiency analysis before the end of the third quarter. We are on track to do that," Chuck Mulloy, a spokesman for Intel in Santa Clara, Calif., told eWEEK.

"Well announce [results] when its completed," he said.

However, Mulloy declined to comment on Intels internal communications or the ultimate direction in which the review will take Intel, including whether or not the company will conduct more layoffs.

Although the review was scheduled to conclude in the third quarter, Intel began making moves much earlier in an effort to become more agile. Two July 2006 actions taken by the company, including cutting a number of management jobs and shuffling its senior executive ranks, were designed to improve internal communication and streamline decision making, the company said.

All told, since April, Intel has jettisoned its communications processor business, reorganized its Flash Memory Group, laid off 1,000 managers and shuffled its senior executive ranks, promoting senior executive Sean Maloney to chief sales and marketing officer, leading its Sales and Marketing Group.

That move reduced the number of executives who report directly to Otellini, giving the Intel CEO more time to focus on larger strategic initiatives, the company said.

The expected conclusion of the review on Aug. 31 sparked reports by The Wall Street Journal and online site, which said Intel could cut somewhere between 10,000 to as many as 20,000 jobs.

Analysts have believed for some time that the chip maker would part with at least 10,000 employees as part of its drive for efficiency.

Intel could reduce its employee roster of about 100,000 by between 10,000 and 15,000, for example, Doug Freedman, an analyst at American Technology Research in San Francisco, wrote in a July 13 report.

Indeed, "Its clear that Intel has to realign its cost structure to compete with a revitalized AMD," said Roger Kay, president of EndPoint Technologies Associates in Wayland, Mass., in a Sept. 1 interview with eWEEK.

"Part of that has to involve personnel cuts as well as other efficiencies such as manufacturing streamlining and possibly the sloughing of more noncore business units," Kay said.

One likely result from a layoff, Freedman wrote in his report, would be Intel using the cost savings to reinvest in research and development of products for PCs, its core business.

Editors Note: This story was updated to include a comment from Intel.

/zimages/4/28571.gifCheck out eWEEK.coms for the latest news in desktop and notebook computing.