Intel Corp. said it will close several older factories, displacing 5,000 to 6,000 workers, as the company reacts to a sharp drop in demand for its computer chips.
The Silicon Valley giant had previously expressed optimism that prior job cuts would be sufficient to cope with the recession's impact on its business. But with a 90% drop in fourth-quarter earnings and a downbeat outlook from computer makers, pressures increased to cut costs further and improve the sagging utilization of its factories.
Intel said not all the affected employees, about 6% to 7% of its work force of 84,000, will lose their jobs. Some may be offered positions at other factories, the company said.
The cuts come on the heels of similar moves across the technology industry. Advanced Micro Devices Inc. last week said it was cutting 1,100 jobs and imposing temporary pay cuts in response to the economic slowdown.
Last week, Intel Chief Executive Paul Otellini told employees in an internal Webcast that profitability in the first quarter was too close to call. Intel hasn't reported a net loss since 1986. An account of Mr. Otellini's remarks was reported by Bloomberg.
And even the mighty IBM is feeling the pain:
International Business Machines Corp. employees have informed Alliance@IBM, an affiliate of the Communication Workers of America, that workers at a number of locations have been told their jobs are being eliminated.
Lee Conrad, national coordinator for Alliance, said that he has received a number of reports of people being informed that they are subject to what IBM calls a "resource action." He said that the reports are coming from people who work for the software group in applications development and marketing, among other functions.
Let's tie this information in with the mass-layoff series from the BLS: Here is a graph of seasonally adjusted mass-layoffs:
Not a pretty picture, is it?