Intel fires 1,000 managers

Intel on Thursday announced its first job cuts in the restructuring of the world’s biggest chipmaker, saying it was firing 1,000 managers worldwide.

“This morning we told our employees that Intel has reduced the number of managers company-wide,” said Chuck Mulloy from Intel. “This is one of the first actions of the structure and efficiency programme that we disclosed in April.”

Paul Otellini, chief executive, launched a 90-day review of the company’s operations in late April after it reported profits fell by a third in its first quarter. He said the aim was to “restructure, repurpose and resize Intel”. “No stone will be left unturned” to create a “leaner, more agile and more efficient Intel”, he said.

Intel shares initially slipped on the news, with investors expecting 10,000 to 15,000 job cuts, according to one analyst’s forecast. But they recovered to be 0.6 per cent higher at $17.98 near the close of trade in New York.

“This is no real surprise,” said Apjit Walia, semiconductor analyst at RBC Capital Markets. “They may want to keep the employee base as big as it is and eventually find [new] revenue-generating business.”

The cuts amount to 1 per cent of Intel’s 100,000-strong global workforce. The company has been suffering from soft demand for PCs containing its micro-processors and loss of market share to its rival Advanced Micro Devices.

It has been exploring new markets for growth in the health sector and the “digital home”, after making little impression on the mobile phone market with its chips.

Last month, it sold the lossmaking mobile business to its Silicon Valley neighbour, Marvell Technology, for $600m. It was its first restructuring move, taking 1,400 employees off its books.

More job cuts could still follow. Mr Mulloy said the efficiency analysis was continuing and there would be further updates. He did not disclose cost savings from the redundancies but these will be reflected in Intel’s outlook when it reports second quarter earnings next week.

“This is designed to improve costs and improve decision-making and communications across the company,” he said of the management cull.

Intel is also expected to sell its networking processor business, which was linked to the mobile division. In May, it revealed it had reorganised its Flash memory division, separating production from its main manufacturing group. This has led to speculation it could spin off or sell this business.