Intel to Cut 10,500 Jobs Over 2 Years

As expected, Intel announced late Tuesday a new wave of job cuts as part of the company's reorganization plan, first detailed last April.

Although voluntary reorganization plans have already been in place, Intel's statement projects the company's goals for "employee population" to be reduced to 95,000 by the end of this year, and 92,000 by the middle of the next calendar year. This results in a reduction of 10,500 employees since the end of last July, when the company released disappointing revenue figures - down 5% year-over-year.

"These actions, while difficult, are essential to Intel becoming a more agile and efficient company," said CEO Paul Otellini, "not just for this year or the next, but for years to come."

Some charges against company revenues, it was learned last July, came from the cost of implementing existing "voluntary separation" programs, some of which were still ongoing. Today, Intel admitted the cost of severing these additional employees could top $200 million.

It is unclear whether today's announcement would mean the loss of 10,500 additional jobs over those already allotted for separation. Some of these cuts are accounted for by the sale of businesses to Marvell and Eicon Technologies; in those situations, former Intel employees may simply find themselves with new employers.

But next year, according to today's statement, "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 short, these will be fabrication-oriented jobs, but using Intel's math the reduction there may only be 3,000. This is far fewer than the ten to twenty thousand some sources were anticipating.

Intel's announcement comes at a curiously opportune time: during its "quiet period" in which it declines to provide guidance on company operations, in accordance with SEC regulations.

But Intel did say it expects to save a total of $2 billion by the end of next year, plus an additional $1 billion the following year. Capital expenditures reduction was tagged by analysts as the principal challenge facing Intel, especially at a time when it must simultaneously modernize its chip fabrication facilities to handle new 65-nanometer and newer 45-nanometer production in order to stay competitive with rival AMD.

Semiconductor analyst firm iSuppli on Tuesday released figures showing Intel's global revenues from semiconductors dropping a stunning 12.8% in just one quarter, to an estimated $7.1 billion from $8.1 billion. Nearly every other manufacturer in iSuppli's Top 10 gained revenue over the previous quarter, at a time when revenues typically decline.