Chips are down for Intel
Published: 21 Feb 2001 08:40 GMT
Intel will delay employee raises, curb hiring, and cut back on expenses in an effort to weather the downturn in the US economy.
The Californian-based chipmaker told employees in a memo Tuesday that the company has imposed a wide variety of cost-control measures designed to reduce operating expenses by hundreds of millions of dollars. The company is not reducing capital spending or its research and development budget, but it is cutting costs nearly everywhere else.
Layoffs are not being imposed at this time, Intel spokesman Robert Manetta said in regards to the memo, but the company hopes to cut back on overall headcount through attrition and strong limits on hiring. Typically, the company loses a single-digit percentage of its work force annually.
One area where employees will definitely feel the impact is in raises. Usually, the company gives annual raises in March or April. Now, non-managerial employees will likely receive half of their 2001 raise this spring and the other half later in the year, he said.
Higher-level managerial employees likely won't see any raises until the autumn. "Hopefully, if things are back in shape, we can deliver the raises by October," Manetta said. "We see this as a proactive way to cut back on costs... We hope to save hundreds of millions in the current year."
The company will also cut discretionary spending on such items as travel and overtime by 30 percent for the year, Manetta said. A "free PC" plan under which employees could obtain a computer has been suspended as well.
The cost-cutting memo is quickly becoming a fad in the high-tech world. Applied Materials, Sun Microsystems, Hewlett-Packard, Dell Computer and others have all warned employees that budgets will be pared back this year because of slowing demand for technology products. Some companies, such as Dell, Gateway and HP, have imposed layoffs. Most of the others have imposed strict hiring reductions.
Despite a downturn in the chip market, Intel is not touching its capital or research budgets. For 2001, Intel expects to spend $7.5bn (£4.5bn) on capital expenses, up from 2000, and $4.3 bn in research.
The skittishness about cutting these items stems partly from the company's experience in early 2000, when Intel found itself short of manufacturing facilities. Intel is also aggressively trying to move into new markets, such as mobile phone chips, which could be hampered if Intel cuts its capital or R&D budget.
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