Intel will slash 10,500 jobs, or about 10% of its work force, through layoffs, attrition and the sale of underperforming business groups as part of a massive restructuring.
The Santa Clara-based company said most of the job cuts this year would come from its management, marketing and information technology ranks, and would expand in 2007 to include manufacturing, design and other segments.
The cuts are expected to save the company $3 billion a year by 2008. Severance costs are expected to total $200 million.
Intel is fighting to reverse sinking profits and make it more efficient as it seeks to regain market share stolen by smaller rival Advanced Micro Devices.
'These actions, while difficult, are essential to Intel becoming a more agile and efficient company, not just for this year or the next, but for years to come,' Intel CEO Paul Otellini said in a statement.
About 5,000 of the affected positions have already been cut or will be eliminated this year through a previously announced management layoff, the pending sale of two businesses, and attrition, said Intel spokesman Chuck Mulloy.
The company plans to cut some 2,500 more jobs by year's end. The remainder will be shed in 2007, when Intel's head count will settle at around 92,000, Mulloy said.
Many analysts and investors were expecting higher job cuts and a better-defined strategy for dealing with problem business units, said Nathan Brookwood, analyst with research firm Insight 64.