Tech blog Second Hand Smoke published rumors earlier this week that Intel may shrink its headcount by 16,000 people and cut back on its marketing. Recall that in late April, against the backdrop of declining profits and market share, Intel CEO Paul Otellini committed the chip giant to a top-to-bottom overhaul.

Since then, things have only gotten worse for Intel, with rival AMD scoring a major deal with Dell. Thus, the prospect of layoffs is not that shocking, but the scale and specificity of the job cuts mentioned was notable, and several other sites have jumped on the news, adding that Intel was planning an announcement on June 15. Silicon Forest has provided a reality check however, and concludes, somewhat tepidly, that "It seems clear Intel anticipates some job cuts out of the reorg. It also seems a tad soon to say massive layoffs are imminent."

Intel's headcount isn't the only thing set to shrink in the world of microprocessors, which is one of the few places you find grown men bragging about having smaller equipment. AMD CEO Hector Ruiz was recently talking up the compact size and power consumption of AMD's chips compared to Intel's. Power usage is a hot topic as data centers fill up with servers whose heat output overwhelms the facilities' air conditioning, and Ruiz claimed that AMD's new server chip consumes 20 percent fewer watts than Intel's.

He also talked up AMD's move to smaller-scale chip-manufacturing processes, with 65-nanometer chips expected later this year. (The size designation actually describes the average size of circuits on the chips, not the chip itself.) Intel looks set to beat AMD to move to a 45-nanometer process next year -- so don't expect an end to the ours-are-smaller trash talk anytime soon.