Intel to lay off 10% of work force

We often define the chip industry as particularly aggressive, with sweeping price cuts, a constant push for better automation, and steep competition. While we as consumers relish the drop in cost, it doesn't always make for a totally happy scenario - increased quality with better automation on smaller die lines also means less people needed. To that effect, Intel is cutting 10% of its current employees by the middle of 2007.

Currently, the company employs about 102,000 people. Before the end of 2006, Intel intends to shave 7,000 off of that figure, leaving them with 95,000. By the middle of 2007, the goal is to have under 92,000 employees. The cuts were announced yesterday as part of the final recommendations from a very thorough internal review, which started in April.

Intel's stock performance has not been the best in recent years, and the company is very interested in making itself more attractive to its shareholders. This means turning a better profit, by either selling more and more chips or reducing its expenses. After it got stuck holding incredibly oversized inventories of the now defunct Pentium 4, Intel has had to seriously consider the latter.

By making the cuts, Intel hopes it will be able to make processors slightly cheaper and thus more attractive than its competitors, while improving the raw percentage of its earnings. If it positions itself just right, it may even win back the extra few percent of the market that it has lost recently to AMD.

It seems like an odd mix, to be sure...we just recently reported on the hiring of new engineers for graphics, which are undoubtedly going to be a pricey addition to the company's expenses. What do you think of this move? Let us know your opinion on the cut-backs in our forums.