Intel announces global restructuring

SANTA CLARA
 

SEPTEMBER 5, 2006

Intel today announced plans for restructuring following an analysis of the
company's structure and efficiency. As a result of the restructuring, the
company expects to generate savings in costs and operating expenses of
approximately $2 billion in 2007. In 2008 the company expects savings from this
restructuring to grow to approximately $3 billion annually.

The savings are a combination of non-workforce related steps and a
significant reduction in Intel's workforce. The company's employee population
will decline to approximately 95,000 by the end of this year, resulting from
workforce reductions, attrition and previously announced actions. The workforce
will decline to approximately 92,000 by the middle of 2007 — 10,500 fewer than
the company's employee population at the end of the second quarter of 2006. In
addition to the savings from the workforce reduction, the company expects
savings in merchandising expenses, capital and materials.

“These actions, while difficult, are essential to Intel becoming a more
agile and efficient company, not just for this year or the next, but for years
to come,” said Paul Otellini, Intel president and chief executive officer.

Most job reductions this year will occur in management, marketing and
information technology functions, reductions related to the previously announced
sale of businesses, and attrition. In 2007, the reductions will be more broadly
based as Intel improves labor efficiency in manufacturing, improves equipment
utilization, eliminates organizational redundancies, and improves product design
methods and processes.

In 2008, the company expects the cost and operating expense savings from this
restructuring to grow to approximately $3 billion as it achieves the full-year
run rate on the projects implemented in 2007. In addition, Intel expects to
achieve a capital expenditure avoidance of $1 billion by better utilizing
manufacturing equipment and space. The company expects that approximately 25
percent of the project's savings in 2007 will reduce cost of sales, and the rest
will reduce operating expenses.

The company expects severance costs to total approximately $200 million,
offsetting some of the expected savings from the project's implementation.

Intel is currently in its quiet period, so an update to its business outlook
will not be made at this time. Further information concerning savings and costs
related to the restructuring project will be provided in quarterly earnings
releases and related business outlook estimates. The earnings release for the
third quarter of this year is scheduled for publication Oct. 17.