Intel axes jobs, cuts costs in bid to stop rival's gains

Intel is cutting 10,500 jobs, or about 10 per cent of its workforce, in a bid to become more competitive against a resurgent Advanced Micro Devices.

The cuts, and other cost-cutting measures stemming from a three-month review of operations, would help the computer chip-maker save US$1 billion this year, US$2 billion next year, and US$3 billion in 2008.

Intel's share price fell US25c, or 1.3 per cent, to US$19.74 after the cuts were announced.

Analysts have said Intel, the world's biggest microchip maker, needed to take drastic action to reverse sliding profits and halt market share gains by its far smaller rival, AMD.

The job cuts, Intel's largest in 21 years, include 1000 managers Intel laid off in July and 2000 workers in two business units that it sold over the past few months. Another 2000 jobs will disappear through attrition.

"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 chief executive Paul Otellini.

- BLOOMBERG