Intel to Announce Restructuring, Job Cuts, Firm Reports

Staff Reporter -- Electronic News, 7/13/2006

Intel today is expected to announce a workforce reduction of 10,000 to 15,000 as a result of its 90-day internal “top to bottom” review of its operations, according to a report by an analyst from American Technology Research.

Analyst Doug Freeman said he expects the company to streamline its research and development efforts to a more PC-centric focus.  Intel has already cut its head count by 1,400 with the sale of its XScale business to Marvell. The company has about 100,000 employees.

“We do favor the work force reductions as the major PC segments (server, desktop and notebook) begin to reuse technology,” he said in his report. “…We now see Intel moving toward a product line-up that is built off of technology first introduced in the first Pentium M processor.”

Some of the freed up R&D resources will be reapplied toward the company’s faster technology cycles, according to Freedman. Intel announced at its last developers’ forum that it would move from four year cycles to two year cycles.

“Ultimately we believe we will end up seeing three year cycles that are more in-line with customer and infrastructure capabilities and demands,” Freedman said.

Intel CEO Paul Otellini first announced the 90-day review during a financial analysts meeting in New York in April.  He called it the biggest internal review at Intel since the mid-1980s and said the company planned to cut $1 billion in spending for the rest of 2006.