Reports have been published about the possibility of Intel cutting around 10,000 of its employees.  As expected, the company today announced that it will be laying off 10,500 jobs, which is around 10 percent of its work force. Intel hopes it can save around $5 billion over the next two years -- and the job eliminations are a critical part of the company's restructuring. Almost 5,000 of the affected jobs have already been eliminated.

Intel is hoping to turn around sinking profits while trying to raise efficiency in its battle to take back market share from AMD. Intel Chief Executive Paul Otellini said “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.”

Most of the job cuts by the Santa Clara-based company will impact the management, marketing and information technology departments, according to Intel. Manufacturing, design and other departments will suffer job cuts sometime in 2007. Intel expects severance costs to total around $200 million. This is going to be the largest number of job cuts by Intel in 21 years.  Even though the loss of 10,500 jobs is bad, analysts expected numbers in the 15,000 range.

This is the biggest Silicon Valley restructuring since Sun Microsystems announced that it would cut 5,000 jobs in May.