Intel to Eliminate 10,500 Jobs

Chipmaker Cutting Costs as AMD Cuts Into Its Market Share

Intel Corp., the world's largest semiconductor maker, will cut 10,500 jobs -- 10 percent of its workforce -- as part of a plan to reduce costs by $3 billion annually starting in 2008.

Intel will have 92,000 employees by the middle of next year, down from 102,500 at the middle of this year, the company said yesterday. The figure includes 3,000 previously announced reductions.

Intel chief executive Paul S. Otellini is conducting the biggest restructuring of Intel's operations since the 1980s in response to market-share losses to Advanced Micro Devices Inc., which have hurt sales and profit.

In April, Santa Clara, Calif.-based Intel forecast a drop in annual sales for the first time in five years. In the second quarter, Intel posted its biggest profit drop in more than four years.

Shares of Intel rose 11 cents, to $19.99, yesterday. The stock has fallen 19 percent this year.

The company said it expects about $200 million in costs associated with the new measures, offsetting some of the planned savings. Intel said it will save about $2 billion in 2007.

As Intel tried to create new markets for its computer microprocessors, its closest competitor gained ground. Sunnyvale, Calif.-based Advanced Micro had 22 percent of the market for chips that power PCs at the end of the second quarter, up from 16 percent a year earlier.

Yesterday's announcement includes 1,000 management jobs eliminated in July and the announced sale of two telecommunications units that will eliminate 2,000 more people from the payroll by year's end.

"They have to go back to their roots, go back to what they know how to do, which is microprocessors for notebooks, desktops and servers," said Hans Mosesmann, an analyst at Moors & Cabot Inc. in New York.

The job reductions by Otellini end a hiring binge in which Intel has added more than 20,000 employees since 2003.