Intel Corp. has decided to phase out its large general-purpose router and switch products. The move will lead to the closing of part of Intel's operation in Denmark, as well as job cuts in the U.S., eliminating several hundred jobs, Intel said Wednesday.
The affected employees work on research and development for Intel's switches and access routers and are based in Copenhagen, San Diego, and Bedford, Massachusetts, said Hilary McGuinness, an Intel spokeswoman in Munich.
"We told our employees Tuesday that we will no longer be investing in switching and router development," she said.
The reorganization measure is part of Intel's bid to reduce its headcount by 5,000 and refocus on chips. Intel employs close to 87,000 people worldwide, over 500 of which are in Denmark.
Though McGuiness initially indicated that workers in Toronto also would be affected, another Intel spokesman, Bill Calder, based in Hillsboro, Oregon, clarified that the reorganization would have "no impact in Toronto." Calder said the Toronto workers work on virtual private networking products and e-commerce systems. Calder said that these are not products the company is phasing out. Calder confirmed that the bulk of the cuts would be in Copenhagen, with some in San Diego and Bedford, but not Toronto.
Intel will continue to sell parts for routers and switches to equipment manufacturers such as Compaq Computer Corp. and Hewlett-Packard Co., McGuinness said.
"We are transitioning from Intel-branded products to providing building blocks," she said.
The measures have a significant impact on Intel's operations in Denmark. The chipmaker will, however, maintain a presence in the country through its chip design subsidiary Giga AS and will retain a small group of people to support existing networking product users, McGuinness said.
Intel previously stated that it wouldn't fire people, but slim down through a restricted hiring process and natural attrition. Affected workers will be allowed to apply for jobs elsewhere within Intel. This will especially be tough in Denmark, as there are no jobs with Intel in any Scandinavian country, according to the company's recruitment Web site.
Employees who choose to leave Intel soon will be offered a "separation package," McGuinness said. Others will be placed in what Intel calls a "redeployment pool."
"We recognize that it will be pretty difficult for Danish employees to find another job within Intel. We will support them in looking for a job elsewhere," said McGuinness. If unable to find new positions, the employees will be fired with a severance package.