The PC crisis: Intel cut 12,000 Jobs
20 April, 2016
Intel announced today a major restructuring plan: slashing 11% of its workforce and shift away from the PC market to to Cloud and IoT
Intel announced a major restructuring plan: slashing 11% of its workforce and shift away from the PC market to to Cloud and IoT
Semiconductor Giant Intel Corp. has announced a restructuring initiative to accelerate its evolution from a PC company to one that powers cloud and the connected devices. Intel will intensify its focus in high-growth areas, making efforts to increase efficiency and profitability.
Intel stated that the Data Center and Internet of Things (IoT) are its primary growth engines, with memory and Field Programmable Gate Arrays (FPGA) accelerating these growth opportunities. These growing businesses delivered $2.2 billion in revenue growth last year, and made 40% of revenue and the majority of operating profit, which helped to offset the decline in the PC market segment.
In an e-mail outlining the restructuring initiative, Intel CEO Brian Kraznich estimated that the changes will result in the reduction of up to 12,000 jobs globally, approximately 11% of employees by mid-2017.
“These actions drive long-term change to further establish Intel as the leader for the smart, connected world,” he added. “I am confident that we’ll emerge as a more productive company with broader reach and sharper execution.” Wrote Kraznich in his mail, which had no concrete details on the exact nature of the restructuring process.
Nevertheless, Intel’s announcement hints that the restructuring will include the merger of offices and reassessment of research and development projects. Intel expects the program to deliver $750 million in savings this year and annual run rate savings of $1.4 billion by mid-2017. The company will record a one-time charge of approximately $1.2 billion in the second quarter.
Intel employs approximately 10,000 workers in Israel in three manufacturing plants, and several development centers. It is yet unclear how the restructuring will affect intel’s activity in Israel.
Behind the move: PC market shrinks
Intel today reported first-quarter revenue of $13.7 billion. The Client Computing Group revenue declined 14% to $7.5 billion from the last quarter, and up 2% over Q1 2015. Data Center Group revenue of $4.0 billion, down 7% sequentially and up 9% year-over-year.
Internet of Things Group revenue of $651 million, up 4% sequentially and up 22% year-over-year. Non-Volatile Memory Solutions Group revenue of $557 million, down 15% sequentially and down 6% year-over-year.
Intel Security Group revenue of $537 million, up 5% sequentially and up 12% year-over-year. Programmable Solutions Group (Formerly Altera) revenue of $359 million, which does not include $99 million of revenue as a result of acquisition-related adjustments.