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SANTA CLARA – 09/04/06 – Chipmaker Intel is reportedly planning to announce a massive layoff within weeks that could eliminate as many as 10,000 jobs.

According to industry sources and several; press reports, the move was spurred by several financially disappointing quarters and the results of an internal corporate analysis conducted in April to find ways to increase efficiency and reduce expenses. 
 
Intel has about 100,000 employees worldwide, so the cut could be as high as 10% of the company's staff.

The job cut is likely to weigh particularly heavily on marketing staff. Intel studies comparing its own staffing levels to competitors' concluded that the ratio of marketing personnel to salespeople was too large, the sources said.

The company declined to comment on the layoff plan, but it said that it has committed to announcing the analysis results by the end of September, spokesman Chuck Mulloy said, but added, "We have not communicated publicly what the plans are with respect to that."

Intel reported $885 million in net income and $8 billion in revenue the company reported for the second quarter. But compared with the year earlier, that net income figure was a 57% drop and the revenue a 13% drop.

Part of the problem, the sources say, revolve around the chipmaker’s loss of marketshare to rival Advanced Micro Devices (AMD), in particular in the server market where chips are sold at higher prices.

AMD rose from having no server products three years ago to claim 26% of the x86 server processor market in the second quarter, according to Mercury Research.

AMD now sells chips to all of the four major server makers.

Intel has said it hopes to reclaim its share with new Xeon server chips such as Woodcrest and Tulsa with the company fighting back with competitive Core processors for personal computers, aggressive chip process, and plans to more speedily introduce new technology. 

Earlier this year, the company realigned its top executive ranks and laid off 1,000 managers to speed the decision-making process.

In June, it sold its Xscale communications and applications chip business to Marvell Technology Group, reducing its work force by 1,400 positions, and spun off its telecommunications business to Eicon Networksin in August, trimming another 600 jobs.

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