Intel to cut more than 5,000 jobs

An Intel Inside sticker is seen on a personal computer for sale in San Diego, California in this...

An Intel Inside sticker is seen on a personal computer for sale in San Diego, California in this April 22, 2013 file photo. REUTERS/Mike Blake/Files

Noel Randewich, REUTERS

, Last Updated: 6:11 PM ET

SAN FRANCISCO - Intel Corp plans to reduce its global workforce of 107,000 by about 5% this year as the chipmaker, struggling with falling personal-computer sales, shifts focus to faster-growing areas, a company spokesman said on Friday.

The announcement, equivalent to over 5,000 positions, comes a day after Intel posted a fourth-quarter earnings report that did little to dispel concerns about a slowing PC industry.

"This is part of aligning our human resources to meet business needs," spokesman Chris Kraeuter told Reuters on Friday.

The job reductions may include early retirement, attrition and other options, Kraeuter added. He declined to say whether details of the changes had been announced internally.

On a conference call with analysts on Thursday after the earnings release, Chief Financial Officer Stacy Smith alluded to a reduction in employment this year and said that Intel would increase investments in areas like data centre, low-power chips and tablets.

Intel dominates the PC chip industry, but it has been slow to adapt its processors for smartphones and tablets, markets now dominated by rivals like Qualcomm Inc and Samsung Electronics Co Ltd.

"If they've got a bunch or resources in a market that may not be dead but is not growing a ton, it probably makes sense to reprioritize those investments in areas where there are fast-growing markets," said Bernstein analyst Stacy Rasgon.

Intel is far from the first major tech company to cut jobs because of slowing demand for PCs.

Hewlett-Packard Co is in the midst of a years-long internal restructuring that would ultimately see it shed 34,000 jobs, or 11% of its workforce, through fiscal 2014.

Dell succeeded last year in taking itself off public markets, allowing CEO and founder Michael Dell to effect a restructuring away from Wall Street's scrutiny. That overhaul is expected to encompass layoffs.

Earlier this week, Intel said a newly built factory in Chandler, Arizona, originally slated as a $5 billion US project that in late 2013 would start producing Intel's most advanced chips, would remain closed for the foreseeable future while other factories at the same site are upgraded.

In its report on Thursday, Intel forecast March-quarter restructuring charges of $200 million, a portion of which could be earmarked for severance pay.

Last September, Intel said it would close an old factory in Massachusetts, eliminating about 700 jobs.

Intel has said it plans to quadruple tablet chip volume this year to 40 million units and aggressively stake out market share ahead of future mobile chip launches. Essentially buying its way into tablets, Intel plans to subsidize its customers' engineering and manufacturing expenses, effectively reducing its gross margins in 2014 by 1.5 percentage points.

Shares of Intel closed 2.6% lower at $25.85 on the Nasdaq on Friday.


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