Intel to lay off 16,000 employees – sources

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Intel to lay off 16,000 employees - sources

Westlake Village (CA) and Chicago (IL) – Update – Intel chief executive officer Paul Otellini revealed last month that Intel is about o enter the most extensive “self re-evaluation” phase in 20 years. Now, first indications of the impact of this process begin to surface: According to industry sources, the company may lay off or “re-deploy” up to 16,000 employees. Intel is expected to announce details on 15 June.

Omid Rahmat reported about Silicon Valley rumors involving layoffs in his blog this morning, referring to industry sources. “Rumors are a leapin’ around Silicon Valley that Intel may end up laying off 16,000 people, and getting rid of a bunch of marketing initiatives, Viiv the unpronounceable being rumored to be one destined for the death knell,” he writes.

Intel, of course, is one of those very few companies that rarely have laid off workers. On the more dramatic occasions, the company laid off about 10% of its workforce back in 1985 and “re-deployed” about 5000 employees after the dotcom bust in 2002. Following a challenging year, “moderating” demand for PCs and increased competitive pressure, Intel may be making more serious decisions that impact up to 16,000 employees and complete business units. At the time of writing this article, it was unclear if the Intel will be announcing layoffs or employee re-deployments.

Intel spokeswoman Gail Dundas did not decline these rumors, but told TG Daily that Intel would not “comment on speculations.” However, she mentioned that Intel “is in the midst of the most comprehensive review of its business structure” to shape the company so it will be “more nimble.” According to Dundas, details about the steps being taken by the company will be announced within 90 days of the initial restructuring announcement, which was made on 27 April.

Sources told TG Daily that Intel has informed its emplyees about “two important Webcasts in the next two weeks,” one of them being hosted by Paul Otellini on 15 June. Otellini’s webcast is described as an “open forum” that will address “structure and efficiency”, “products” and “competition.”

Industry experts such as Nathan Brookwood from consulting firm Insight64 reacted surprised by the possible scope of the restructuring. According to Brookwood, especially communications products and network processors could be affected. “These units consume a lot of resources and were not profitable last time I looked.” He was uncertain whether Viiv would make sense as a target to be eliminated. While it has not gained the traction that was initially expected, there aren’t enough resources in the digital home group to justify such a move, he said. And still, TG Daily got word that the company already has scrapped projects in the Viiv group, such as the “Quick Resume” feature for Viiv devices.

The Itanium 2 may surface once again as a possible dead-end in Intel’s long-term business strategy. “The problem is that, while Itanium has not lived up to its expectations, Intel has a customer that is very successful with Itanium – HP,” Brookwood said. Intel would have to work HP and also about the recently established Itanium alliance.

Related article:
Intel’s Otellini announces massive restructuring, possible business sell-off