Intel Corp., the world’s biggest chipmaker, is aiming to cut about 10 percent of its U and global chipmaking workforce to make chips that are cheaper to produce and sell, according to people familiar with the matter.
The moves would reduce the number of employees in the United States by about 1,000 people to about 5,500, and would result in a sharp reduction in Intel’s market share, said the people, who asked not to be identified because the plans are private.
The company has a market capitalization of about $19 billion.
The cuts would be effective Dec. 31, the people said.
The company is in the midst of a series of cost-cutting initiatives as it tries to turn around its performance.
Last year, Intel said it would cut the number in-house manufacturing staff by about 100 people.
It said it also planned to reduce its headcount in chip design by about 5 percent.
In addition to the reductions, Intel is working on a strategy to trim its costs by a further 2 percent over the next few years.
The restructuring plan, which is still being developed, is being led by executive chairman Brian Krzanich and includes consolidating a range of manufacturing and supply chain functions.
The people, whose roles have not been disclosed, said Intel is also exploring options to cut labor costs, such as through outsourcing, to help offset the cuts.
The people said that if the company follows the plans, it would likely be able to achieve lower-cost production efficiencies.
The move to cut staff would have a significant impact on Intel’s financials, which are dependent on selling chips and servers.
Intel said last month that revenue fell 8.3 percent to $9.2 billion for the third quarter, a slide that analysts blamed on the loss of some sales and some software licenses.
The cuts could also impact Intel’s future plans to make the first chips in chip technology and to expand its presence in other emerging markets, including India and Brazil.
Intel recently began making chips in Brazil and India, but it does not have production capacity there, the two people said, declining to be named because the matters are private and not public.
Intel is already a leading chipmaker in the global market for servers and servers processors, but the company has struggled to compete with companies such as Intel Corp. and Samsung Electronics Co. in developing new and improved server chips.