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Intel will cut its global workforce

SAN FRANCISCO – Intel plans to trim more than 5,000 jobs from its workforce this year in an effort to boost earnings amid waning demand for its personal computer chips.

The Santa Clara, Calif., company confirmed the job cuts Friday, the day after Intel Corp. reported its profit and revenue had fallen for the second consecutive year.

The purge represents about 5 percent of the roughly 108,000 jobs Intel had on its payroll at the end of December, which includes several thousand in Rio Rancho.

The company intends to jettison the jobs without laying off workers, said spokesman Bill Calder. The reductions will instead be achieved through attrition, buyouts and early retirement offers.

Intel operates one of its largest chipmaking plants in Rio Rancho, employing about 2,900. The company cut 400 jobs there last year, fueling fears within the community about the future of the facility, which opened in 1980 and as recently as 2005 employed 5,300 workers.

The company has not said which Intel locations worldwide would be affected by cuts.

“As it pertains to specific product groups or a site like Rio Rancho, there are no details about that right now,” Intel’s Rio Rancho spokeswoman, Natasha Martell Jackson, told the Journal. “It’s a global workforce transition.”

The cuts will take place throughout 2014, Martell Jackson said.

Intel didn’t estimate how much money it hopes to save by eliminating jobs. But the company needs to pare its expenses if it hopes to end a two-year trend that has seen earnings fall from $12.9 billion in 2011 to $9.6 billion in 2013.

Intel is forecasting that its revenue this year will be about the same as in 2013 – $13.83 billion – making it unlikely its profits can rise without cost cuts.

This marks Intel’s first significant job cuts since a company insider, Bryan Krzanich, succeeded Paul Otellini as CEO eight months ago.

“We are constantly evaluating and realigning our resources to meet the needs of our business,” Calder said.

Intel’s financial performance has been challenged, because the company didn’t adapt quickly enough as the growing popularity of smartphones and tablet computers undercut sales of PCs running on its chips. Worldwide PC sales have dropped from the previous year in seven consecutive quarters, an unprecedented decline.

The trend is a problem for Intel because most mobile devices don’t rely on its processors.

As Intel has struggled to come up with a successful strategy for mobile computing, the company has turned into a stock market laggard.

Since Intel’s stock hit a five-year high of $29.27 in May 2012, the shares have fallen by 12 percent. Meanwhile, the Standard & Poor’s 500 index has climbed by 31 percent.

Intel’s stock dropped 69 cents Friday to close at $25.85.

Earlier this week, Intel acknowledged that a massive, multibillion-dollar, computer-chip factory it built in a Phoenix suburb will remain vacant for now.

Intel spokesman Chuck Mulloy said the Chandler, Ariz., fabrication plant known as Fab 42 will be used at a future date but specifics haven’t been decided. Mulloy said employees doing the work that had been anticipated for the new plant are instead working in other facilities in Chandler.

The Arizona Commerce Authority has said Intel received $3.3 million in state tax credits for the additional jobs.