Fears emerge over Intel job cuts

Fab 17 for the chop?

The weak outlook in the PC market could lead Intel to announce layoffs and cost cutting when its Q2 figures are released on Tuesday.

According to a report in the Wall Street Journal, Chief Executive Officer Craig Barrett is scheduled to speak to Intel employees after the close of the US stock markets, just as Intel discusses its second-quarter results in a conference call with analysts.

The speculation is based, in part, upon comments made by Barrett last autumn. At that time he said that although Intel's revenues were roughly the same in the years 1998 and 2001, the company now had 20,000 more employees. Observers are inferring that because revenues have shrunk rather than increased over the past nine months, Intel may choose to reduce its costs.

Intel has given no indication that the speculation is true. It is also worth noting that the Wall Street Journal acknowledges that Barrett may have other plans for the speech to employees, such as pay cuts or he may simply wish to offer encouragement to his employees.

Intel lowered its revenue guidance for the second quarter in early June, citing lower-than-expected demand in Europe. It reduced its estimates from between USD6.4 billion and USD7.0 billion down to between USD6.2 billion and USD6.5 billion. In the same quarter last year, the world's biggest chipmaker had second quarter revenues of USD6.3 billion, down 24 percent from the corresponding period in 2000.

Intel had about 83,000 employees worldwide at the end of the first quarter. In Ireland, the company employs 3,150 workers based in Leixlip, with a further 1,000 in permanent employment with long-term subcontractors to Intel. There are also a further 82 people employed at Intel Communications Europe, located in Shannon.

It is thought that if any cuts are made, Intel will still remain a major employer in Ireland as the construction of Fab 24 moves ahead. Construction, which had been delayed for a year, resumed on the new facility in April creating over 1,000 construction jobs, with 1,000 Intel workers to be employed there by 2005.

If Intel does cut jobs as many industry watchers suspect, the news would follow on a string of bad news from the semiconductor industry that includes Intel's own profits warning. Additionally, in early July, chip manufacturer AMD cut its second quarter sales estimates for the second time in a few weeks, reflecting the weak global market for personal computers. Other bad news came from NEC, the Japanese computer and chipmaker, who in June cut 7,000 jobs.

Still, there has been good news as well. According to the most recent data from the Semiconductor Industry Association, chip sales reached USD11.37 billion worldwide in May, a 2.8 percent increase from April, although sales in Europe dipped by 2 percent. SIA also pointed out that this figure is down 20 percent on the USD2.82 billion reported this time last year.

© ENN.

The Register adds
The channel checkers at Fechtor Detwiler, the Boston investment bank, hear that Intel's Fab 17 plant in Hudson, Massachusetts, "is in trouble". In a note yesterday, it reports understaffing on the P4 production lines, poor yields, poor staff morale and low output - an estimated 3700 wafer starts a week, against a target of 6,500 a week. And where have all the P4 staff gone? Reassigned to the Alpha line, according to Fechtor Detwiler, which notes 'indications' that Intel is ramping up production for the so-called Legacy Chip. This will ensure sufficient inventory to meet customer orders for the doomed chip through to 2004.

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