Intel has announced plans for restructuring following an analysis of the company's structure and efficiency. As a result of the restructuring, the company expects to generate savings in costs and operating expenses of approximately US$2 billion in 2007. In 2008 the company expects savings from this restructuring to grow to approximately US$3 billion annually.
The savings are a combination of non-workforce related steps and a significant reduction in Intel's workforce. The company's employee population will decline to approximately 95,000 by the end of this year, resulting from workforce reductions, attrition and previously announced actions. The workforce will decline to approximately 92,000 by the middle of 2007, which is 10,500 fewer than the company's employee population at the end of the second quarter of 2006. In addition to the savings from the workforce reduction, the company expects savings in merchandising expenses, capital and materials.
Most job reductions this year will occur in management, marketing and information technology functions, reductions related to the previously announced sale of businesses, and attrition. In 2007, the reductions will be more broadly based as Intel improves labor efficiency in manufacturing, improves equipment utilization, eliminates organizational redundancies, and improves product design methods and processes.
The company expects severance costs to total approximately US$200 million, offsetting some of the expected savings from the project's implementation.
Intel is currently in its quiet period, so an update to its business outlook will not be made at this time. Further information concerning savings and costs related to the restructuring project will be provided in quarterly earnings releases and related business outlook estimates. The earnings release for the third quarter of this year is scheduled for publication 17 October.