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Intel to Eliminate 10,500 Jobs

The 10,500 include those who were fired before today (numbering about 3000). Looks like the announcement was in line with what many expected, though I am sure that analyst who thought that “anything less than 10,000 will be seen as weak” thinks it is a wee bit weak.

The offical press release is short on specifics, but nobody really expected any. There might have been a bit more information in the internal webcast, but from inside Intel, there has been no reaction so far. The Intel bloggers (Tinyscreenfuls.com Josh Bancroft, Open Culture, The Unoffical Intel Blog etc.) are quiet – and have been over the last week or so. Maybe the fear for their own jobs has kept them from making any public comments (Update: In the comments on this post, Dawn from Open Culture comments that there was nothing to report anyway and Intel employees knew as much as anybody else).

So it looks like the immediate cuts will be mostly in administration, marketing and IT (there is some very bitter irony in the world’s larget semiconductor manufacturer cutting in its IT department).

My thoughts are with those who will be affected by this.

Here is a run-down of the news reports as they spread and as I blogged them live around 4:15pm:

Just in from the Oregonian:

Intel, Oregon’s largest private employer, said this afternoon that it will eliminate about 8,000 jobs worldwide over the next year as part of a major restructuring. If the cuts were made proportionately across the company’s geographic locations, that would mean about 1,700 Oregonians will lose their jobs.

Even so, that represents a smaller cutback than most Intel watchers had been expecting.

Though the effect of the layoffs on the economy in Oregon and in Washington County are unclear, the company has said they will be part of its biggest corporate overhaul in two decades.

CNet: Intel lowers the boom on marketing, IT departments

just in Intel announced plans Tuesday to lay off thousands of workers over the next year after a strategic review designed to prepare the company for life with a smaller share of the chip market.

As first reported by CNET News.com, the layoffs primarily hit the marketing and information technology departments. The company said it will have 10,500 fewer employees by the middle of 2007, as compared to its headcount at the end of this year’s second quarter.

Intel’s Announcement:

Intel Announces Restructuring
Tuesday September 5, 4:15 pm ET

Expects to Reduce Costs and Operating Expenses By $2 Billion in 2007, By $3 Billion in 2008

SANTA CLARA, Calif.–(BUSINESS WIRE)–Sept. 5, 2006–Intel today announced plans for restructuring following an analysis of the company’s structure and efficiency. As a result of the restructuring, the company expects to generate savings in costs and operating expenses of approximately $2 billion in 2007. In 2008 the company expects savings from this restructuring to grow to approximately $3 billion 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. 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 expects 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 president and 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 businesses, and attrition. In 2007, the reductions will be more broadly based as Intel improves labor efficiency in manufacturing, improves equipment utilization, eliminates organizational redundancies, and improves product design methods and processes.
In 2008, the company expects the cost and operating expense savings from this restructuring to grow to approximately $3 billion as it achieves the full-year run rate on the projects implemented in 2007. In addition, Intel expects to achieve a capital expenditure avoidance of $1 billion by better utilizing manufacturing equipment and space. The company expects that approximately 25 percent of the project’s savings in 2007 will reduce cost of sales, and the rest will reduce operating expenses.
The company expects severance costs to total approximately $200 million, offsetting some of the expected savings from the project’s implementation.
Intel is currently in its quiet period, so an update to its business outlook will not be made at this time. Further information concerning savings and costs related to the restructuring project will be provided in quarterly earnings releases and related business outlook estimates. The earnings release for the third quarter of this year is scheduled for publication Oct. 17.

CNNMoney:

Intel to cut 10,500 jobs

World’s largest chipmaker announces plan to save $2B in 2007.

September 5 2006: 4:30 PM EDT

NEW YORK (CNNMoney.com) — Intel Corp., the world’s largest chipmaker, announced Tuesday a broad restructuring plan, including job cuts, that aims to save the company $2 billion in 2007.

Santa Clara, Calif.-based Intel said it would cut 7,500 jobs by the end of this year and cut an additional 3,000 jobs by the middle of 2007.

tags: intel, layoffs, intel+layoffs, oregonian

Those of us at Intel have been quiet only because there isn’t much to say. The official Intel announcement you quoted above contains the same information as what was shared with us as employees. The sad truth is that we don’t know any more than you do

And I’ve been quiet because we just had a new baby, and I’m at home. Not even checking my work email this week, so everything I know comes from the web.

Intel does this every year or two. Lays off thousands, to look good on paper, then quetly builds up it worker base with contract labor, in order to circumvent its labor agreements with local county and city government, in order to quality for its tax kickbacks. Then turns around and takes that money and invests it in overseas fabs. I’ve seen it happed more then a dozen times. Would be quit shocking were someone to do a trend analysis of intel’s layoffs over the years.

Mark – interesting theory. However, it seems they are keeping numbers pretty low for now and at least in Oregon, the employment numbers have remained very stable.

The China fab is going to be an interesting test case for how well Intel will do in such a different environment (Israel and Ireland seem to have worked quite well for the company).