Intel hit by slowdown in chip demand

The measures include deferring pay increases, restrictions in hiring new staff and reducing "discretionary spending," which includes travel and overtime, by 30 per cent, said Gillian Murphy, a spokeswoman for Intel.

Intel's senior managers won't receive a pay raise until at least October; all other employees will get only half of their scheduled raises in April.

"The raises are deferred pending improvement of the market," said Murphy.

The chip giant said it will reduce the size of its workforce through a restricted hiring process and natural attrition. There will be no layoffs. Intel currently has about 80,000 employees worldwide.

Murphy stressed that the cutbacks won't affect Intel's $US4.3 billion budget for research and development, nor it's $US7.5 billion intended for capital expenditure.

"When we come out of this [dip in chip demand], we want to be in a strong position. So we will continue to invest in expanding production facilities, 300 millimetre equipment and facilitating the Pentium 4 ramp," Murphy said.

Intel already said it would be affected by the slowdown in the market when it presented its year 2000 results on 16 January. The company is predicting revenue for its first quarter of fiscal 2001 to be down 15 per cent, plus or minus several percentage points, compared to its fourth-quarter revenue of $US8.7 billion. Intel chief executive officer Craig Barrett informed employees of the cost-cutting moves in an e-mail on Tuesday.

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Joris Evers

PC World

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