Intel is quietly making plans to lay off employees across the company later this month in response to disappointing sales.
A confidential, internal memo obtained by The Oregonian/OregonLive indicates that Intel wants to keep expenses flat to match the company's reduced revenue outlook for 2015, citing plans it announced in April to cut its research and administrative budget by $300 million this year.
"This means that we'll prioritize investments, slow down hiring, and drive other efficiencies, including a performance-based involuntary separation package," reads the memo, which was just distributed to Intel managers.
The memo doesn't specify how many people will lose their jobs, but said the cuts will begin June 15 and conclude one month later. It indicates Intel has already identified employees who will lose their jobs, but hasn't notified them.
"We need to reduce overall spending for the second half of the year," the memo reads. "Some of this will come from reductions in employment and some from other spending cuts. Employee reductions will vary by business group."
Intel declined to discuss the memo.
"We will not comment on internal, confidential communications that are not intended for public consumption," said Chuck Mulloy, a spokesman at Intel's headquarters in Santa Clara, California.
The pending cuts do not appear directly related to Intel's pending, $16.7 billion takeover of programmable chipmaker Altera Corp., which Intel confirmed this week after a prolonged courtship. The memo says the process for identifying which employees will lose their jobs began in April, shortly after Intel reported first-quarter results and announced spending cuts for the year.
Intel has roughly 106,000 employees worldwide, including 17,500 in Washington County, home to the company's largest and most advanced operations anywhere.
No other business in Oregon employs that many, and no other company comes close to the chipmaker's economic impact on the state, with billions of dollars invested in leading-edge research factories in Hillsboro.
Intel's Oregon headcount is currently near an all-time high but total employment has fluctuated considerably in recent years, falling sharply when sales are down and rising rapidly when business is up.
Intel posted record revenues in 2014, but it has been struggling for several years because of declining demand for PCs and laptops, which account for roughly 60 percent of the chipmaker's sales.
Consumers and businesses are shifting their dollars to tablets and smartphones and holding onto their computers longer, finding less tangible benefits from new versions of the Intel microprocessors that run the machines.
Intel had been projecting 5 percent growth in 2015 but cut that forecast in April amid weak PC sales.
.
The chipmaker finalized a list of affected employees on May 29, according to the memo, which says Intel is training managers this week and next on how to notify laid-off workers.
Last month, The Oregonian reported that Intel was trimming employment in its manufacturing group with a voluntary buyout. The new cuts, according to the memo, are a "Performance-based Mandatory Buyout."
The memo says Intel identified employees targeted for the layoff based on their ratings in the company's rigorous annual review process, known as Focal, and through other performance evaluations.
"PMB helps groups across Intel reach their year-end headcount targets in a way that's meritocratic and supports consistent performance management across groups," it says.
Laid-off employees will receive a minimum of two months' pay, according to the memo, plus extended health insurance and additional payments -- based on their time with Intel -- in exchange for release of any claims against the company.
Intel's memo indicates the company does not plan to announce the cuts.
"We will not broadly communicate the program internally or externally," the memo reads. "We are primarily communicating only to MCM (management committee members), senior leaders, people managers, affected employees, and the direct managers."
-- Oregonian reporter Rebecca Woolington contributed to this article.
-- Mike Rogoway
mrogoway@oregonian.com
503-294-7699
@rogoway