Intel will delay employee raises, curb hiring, and cut back on expenses in an effort to weather the downturn in the US economy.
The chipmaker told employees in a memo yesterday 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 its 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 more likely receive half of their 2001 raise in two halves. Higher-level managerial employees likely won't see any raises until later in the year.
"Hopefully, if things are back in shape, we can deliver the raises by October," Manetta said. "We see this as a pro-active 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.
Despite a downturn in the chip market, Intel is not touching its capital or research budgets. For 2001, Intel expects to spend US$7.5 billion on capital expenses, up from 2000, and US$4.3 billion 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 cell phone chips, which could be hampered if it cuts its capital or R&D budget.
