Most job reductions this year will occur in management, marketing and IT functions, as well as from previously announced sales of businesses, according to the company. Next year, the reductions will be more broadly based as Intel boosts labor efficiency in manufacturing, improves equipment utilization, eliminates organizational redundancies, and bolsters product design methods and processes, the company said.

The company expects severance costs to total approximately $200 million.

Arnold Reinhold, an analyst at Waltham, Mass.-based Hurwitz & Associates, said Tuesday that Intel's direction is clear. "The short answer is that they've been under a lot of pressure from [Advanced Micro Devices] and they've got to get to a point where they can make money."

Rob Enderle, principal analyst at Enderle Group in San Jose, Calif., said the problem with Intel's announcement is that the company's staff cuts have been coming piecemeal -- meaning this may not mark the end of layoffs. A similar situation occurred at Hewlett-Packard Co. (HP) when then-CEO Carly Fiorino launched multiple rounds of layoffs, leaving the remaining workers with a vague idea of the company's direction, Enderle said.

When Mark Hurd took over at HP, he implemented one round of layoffs, made it clear that the time for rebuilding was upon the company, and set out to make it happen, Enderle said. "Now [HP is] really taking the battle to Dell," he said.