Intel to reduce global workforce by 5 percent in 2014

SAN FRANCISCO Sat Jan 18, 2014 8:52am IST

People visit the Intel booth at the 2013 Computex exhibition at the TWTC Nangang exhibition hall in Taipei June 4, 2013. REUTERS/Pichi Chuang/Files

People visit the Intel booth at the 2013 Computex exhibition at the TWTC Nangang exhibition hall in Taipei June 4, 2013.

Credit: Reuters/Pichi Chuang/Files

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SAN FRANCISCO (Reuters) - Intel Corp(INTC.O) plans to reduce its global workforce of 107,000 by about 5 percent 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 said.

The job reductions may include retirements, voluntary programs and other options, Kraeuter said, adding that Intel's typical annual attrition worldwide is about 4 percent.

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 such as data center technology, 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 such as Qualcomm Inc (QCOM.O) and Samsung Electronics Co Ltd (005930.KS).

"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 has both added and shed significant numbers of jobs over the past decade. Struggling to fend off a challenge by smaller rival Advanced Micro Devices Inc (AMD.N) in 2006, Intel announced it would reduce its workforce by over 10,000 positions, but its overall number of employees has grown since then.

The chipmaker is also not the only tech company to trim its workforce because of slowing demand for PCs since Apple's (AAPL.O) iPad started to cut into demand for laptops in 2010.

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

Dell succeeded last year in taking itself off public markets, allowing CEO and founder Michael Dell to restructure 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 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 percent lower at $25.85 on the Nasdaq on Friday. They earlier traded down as low as $25.25.

(Reporting by Noel Randewich; Editing by Matthew Lewis and Lisa Shumaker)

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