Intel today 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 $2 billion in 2007. In 2008 the company expects savings from this restructuring to grow to approximately $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 – 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.
“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,” said Paul Otellini, Intel president and chief executive officer, in the press release.
According to Intel, 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.
In 2008, the company expects the cost and operating expense savings from this restructuring to grow to approximately $3 billion as it achieves the full-year run rate on the projects implemented in 2007. In addition, Intel expects to achieve a capital expenditure avoidance of $1 billion by better utilizing manufacturing equipment and space. The company expects that approximately 25 percent of the project’s savings in 2007 will reduce cost of sales, and the rest will reduce operating expenses.
The company expects severance costs to total approximately $200 million, offsetting some of the expected savings from the project’s implementation.
Intel is currently in its quiet period, so Intel says 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 Intel’s quarterly earnings releases and related business outlook estimates. The earnings release for the third quarter of this year is scheduled for publication Oct. 17.
Source: http://www.intel.com/pressroom/archive/releases/20060905corp.htm
[Thanks to MacDailyNews Reader “Rainy Day” for the heads up.]
i would have thought this to do with dell (largest intel customer) moving towards amd, though i could be wrong, hopefully mac sales will help compensate for this
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Intel has been in the crapper because they’ve been work’n feverishly to get the new higher performance chips out, now it’s just a matter of sell’n the new wares (and developing the next generation)
Intel culls the herd. Reminds me of the film “New Cry Wolf” and the Inupiat story of why the wolf was created. Brutal, but necessary.
Intel has always been slow
Just look at the real performance benchmarks of the Mac Pro Quad against the PPC Quad, a mere 7% performance improvement?
How many years has the G5 processors been out now?
Why did Apple switch to Intel? It’s because Hollywood and Intel have spooned up.
Content is king and Hollywood wants Intels DRM scheme.
Steve Jobs is about to unload Apple to Google or Intel.
AMD wasn’t a option.
Steve Jobs is like a property investor, buy it cheap and dumpy, fix it up and sell it for a profit.
He’s done it two companies already:
Bye bye, Next
Bye bye, Pixar
Soon bye, bye, Apple
Hello retirement.
I for one welcome our new Google overlords
Bahh Humbug,
I know SJ is out to make money but he has more than a monetary involvement in Apple. He wants to change the world. Apple is not selling to anyone. And his health is fine. Only intel has the intellectual capital to keep pace with Apple’s momentum.
@ Bahh Humbug : <roflol>!
@ anaknipedro : Bahh Humbug is a troll; please do not feed. Steve did not buy NeXT, he founded the company.
And “sold” it to Apple. Altho it could more acurately be called a ‘reverse takover’
Whoa, my MW is car.
how serendipitous, a Pixar word on an Apple page talking about Next
Bahh Humbug has gotten through the RDF. He’s more right than wrong.
poo, on the other hand, is looking for silver linings where they don’t exist.
Intel is in very real, very deep trouble my friends. They can’t ramp up Core2 production very quickly, because only a few of their Fabs are cabable of making it. All the rest are dedicated to old Netburst stuff, mainly because they don’t have the time or the money to reconfigure them fast enough. Netburst isn’t selling (‘unsafe at any speed’) and yet it’s 80% of what they make. What company can survive when 80% of it’s operations are devoted to making a product they can’t sell? Answer: NONE.
I tried telling you guys all those many months ago when The Switch was announced that it was a mistake. Intel is too big and too slow. The culture is shot through with corruption and ass kissing. Otellini, weener that he is, probably didn’t even know that this perfect storm was coming. But any clear-eyed outside observer should have – and many did. And now, independent benches are showing Woodcrest to be incapable of handling more than 2 gigs of memory, the whole Core2 architecture isn’t anywhere near as ‘fuel efficient’ as it was promised, and the performance advantage over the G5 is negligable-to-non-existant. And whether IBM would have kept up development of it had Apple stuck around is irrelevant, since AMD’s CPUs are already matching Intel’s best, and they have a die shrink coming up AND a new chip architecture to boot (K8L).
How Jobs wound up thinking this Intel-deal was a good move would be beyond comprehension … IF you didn’t recognize and accept the Intel/Hollywood studio connection. Jobs thought he saw a shortcut to riches, by accepting their demand that he incorporate Intel’s DRM technology into every Mac Apple makes, and that meant dumping PPC, and shunning AMD. Performance had nothing to do with it, better CPU supply or prices had nothing to do with it, and certainly Intel’s prowess as a company had absolutely nothing to do with it. the motivator was getting on Hollywood’s good side, and for that we get $10-15 dollar movie downloads (if reports are to be believed). Yeah! Thanks Steve-o … for nothing!
The only good news is that with AMD still thriving, and Universal Binaries making even a switch back to PPC possible, even a total crash of Intel won’t kill Apple. But I’d trade that advantage for a Apple investing half the money they spent on the switch on contracting either PASemiconductor or IBM to make the next-gen PPC CPU.
Anybody got a time machine?
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MDN magic word … I kid you not … “expected”
As in, “These major problems Intel is having should have been …”
“… independent benches are showing Woodcrest to be incapable of handling more than 2 gigs of memory …” should read:
“… independent benches are showing Woodcrest to be incapable of handling, very well, more than 2 gigs of memory …”
The problem is Intel’s implementation of 64bit technology on x86. I have no idea why they’re having this issue, but it’s becoming apparent that they didn’t do as good a job with it as AMD did, since Core2 performance drops off CONSIDERABLY when 64bit levels of memory are involved. At 32bit memory levels, it does ok – neck and neck with AMD’s latest – but above 2 gigs, things get messy.
Odyssey67:
Thank you very much for the doom and gloom forecast. Since you have aptly demonstrated your brilliant capacity for predicting this “perfect storm”, what is your next prediction? In particular, what are the 5 year prospects for Intel, AMD, IBM, and Freescale? A forecast isn’t complete unless all 4 parties are included in the analysis.
Just to make things even more interesting what would you have done that Apple didn’t do? In particular, which chip maker would you have selected for the next generation of Macs and why?
“Anybody got a time machine?” Who needs a time machine when we have your crystal ball, eh, Odyssey67?
Odyssey… you’re trying pretty hard to ignore the multitude of benchmarks that show the Core2Duo chips spanking AMD’s current offerings in every manner of measurement- price, performance, and energy efficiency. Of course it will take some time to change their manufacturing over and retool their factories… I don’t know who in their right mind wouldn’t expect this, or what magic company you’re thinking of that wouldn’t have to do this… although other companies with less production capacity might have an easier time of it because they have less to change over. Netburst are still selling, I know some friends that just bought pentium 4’s.
Bahh Humbug: Depending on which benchmarks you look at, the 2.66 Ghz Mac Pro gets more than 7% on many tests, and the 3Ghz Mac Pro is considerably faster. So unless you’re comparing the current mid-range to the previous high-end, I don’t know where your “only 7% faster” is coming from. Or do you really think that the G5 would have hit 3Ghz by now?
MDN MW: Building, as in “By partnering with Intel, Apple is building a solid foundation for the future instead of just looking in the short-term like some people seem to”
Whew! Thank god. I thought it said 10,600 jobs.
Intel should replace all computers by Apple and save one more billion in support for the crap “ruindous”.
Hey, look who crawled out from under his rock! It’s Odyssey67! Where have you been all this time? Hiding from the successful Intel transition that kinda made you look like an idiot, what with all your grandiose predictions of dire disaster?
And hey, a movie service is expected on Tuesday! Let’s see how well your “OMG DRM DOOMZOR!” prediction holds out. Remember, Odyssey says that Apple only went with Intel for their DRM for the movie service, so this service will only work with the newest Macs, not PPC Macs or PCs. Right?
Ampar – Actually, it was 10,501 jobs. They rounded down as a PR move – they didn’t want it to look TOO bad.
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Intel’s P4 — Netburst — architecture is a disaster and they compounded the disaster by denial for too many years. I have a friend who is a top IT guy who has been telling me for years just how bad the P4 is. And the marketing dweebs at Intel tried to BS the world into thinking otherwise. Intel is finally paying the price. But just as their customers have rebelled and gone over to AMD, Intel successfully designed and is transitioning to a new outstanding chip technology, the Core architecture, which came out of their Israeli operation — I guess it was far enough away from headquarters that it survived the old regime.
Now Intel is ready to compete, but the deals for AMD’s Opteron from the box assemblers is displacing a lot of Intel business now. Intel will come back, but it will take time. And with Apple as their most loyal customer, Intel will most likely – and probably is – giving Apple some sweet deals.
significant reduction in Intel’s workforce.
This has been going on for a few years now and will continue apace. It’s cutting employee overhead and converting them to outside contractors. P&G’s selling off entire divisions so they can turn around and pay them per project. I think the same thing is happening here with Intel.
LinuxGuy and Mac Prodigal Son:
I agree that the new Core2 is a huge advance for Intel, and in many ways is a fine CPU. But in some other crucial ways its not – namely, it’s a 64bit kludge. On 64bit apps, or with tasks that use more than 2GB (where a 32bit chip maxes out), Core 2 starts to suck wind. It’s just not well optimized in that regard, and it’s no small problem to fix. Second, it’s FSB memory controller isn’t due to be replaced by an on die controller until sometime after the 4 core rollout, and I think that’s a performance trainwreck waiting to happen – it’s memory subsystem is already having a hard time feeding 2 cores. Last, Intel has utilized massive caches to overcome the memory problem, but a] they aren’t massive enough for the tasks that will utilize more than 4, 8 or eventually 16MBs (which isn’t great news for professionals), and b] those transistors dedicated to cache are adversly impacting other advances they could get out of the CPU. For example, whatever energy efficiency the Core 2 architecture at base really has is hamstrung by big caches, b/c the cache can’t be ‘throttled down’ – since you always need it to avoid a performance hit, it’s always lit up. Another issue to remember is that all that cache requires die real estate, which means correspondingly less is available for other, more advanced circuitry.
But my point above was that this isn’t just a technology issue, it’s a financial one. Frankly, given how much time and money that’s been thrown at Core2, these problems mentioned above shouldn’t be there. Yet regardless, it will take even more time & money for Intel to fix them. As these layoffs amply demonstrate, and Intel’s own FCC filings say explicitly, money is not something Intel has in abundance right now. And, without money, in a failing marketshare situation “time” is not a luxury either. They would need to grow market share in a relatively short period in order to chart a more positive fiscal course, and AMD isn’t allowing it. DELL & HP, the two biggest consumers of x86 chips, are becoming more AMD-oriented every day. And as I said, Intel still has the vast majority of their productive capacity making Netburst style chips, that no one is buying. So whatever huge demand might arise for Core2, Intel can’t meet it for another couple of crucial quarters (at least) anyway.
Many people are seriously considering the once unfathonable possibility that monolithic Intel might actually BK. It’s that bad for them. And since they’re tied together, logic dictates what’s bad for Intel will be bad for Apple too.
As for my predictive capacity (something others mentioned above), all I’ve said was that going to Intel was a needless exercise, as Apple was already growing share with PPC; that IBM, Freescale and PASemi provided a more robust ‘tech ecosystem’ to be in, with more and cheaper options if one was dropping the ball; and that if they HAD to move to x86 for any reason other than TPM/video DRM, then it made massively more sense to go with AMD. The latter, with their more flexible productive capacity and better technological base (no 64bit or memory controller problems with them) would prove over time how much more expensive going exclusively to Intel would be.
I stand by all of it.
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“As these layoffs amply demonstrate, and Intel’s own FCC filings say explicitly…” should read:
“As these layoffs amply demonstrate, and Intel’s own SEC filings say explicitly…”
Got my worthless government bureuocracies mixed up.
Odyssey67 – Don’t know if you will get back to this thread or not, but I wanted to let ya know that it’s VERY interesting reading.
Thanks © – I can’t play in the sandbox as much as I’d like, but I do try to make it relevant.
Speaking of, here’s an interesting tidbit I posted on a newer MDN story:
http://www-03.ibm.com/press/us/en/pressrelease/20210.wss
AMD & IBM … Opteron & Cell … combining to make the fastest computer in the world (by a pretty huge margin) thanks to Hypertransport. In other words, here we see two out of three technologies Apple had direct access too, but that Jobs threw overboard for a ‘spy chip’ from the Intelosaurus.
Freakin unbelievable.