Intel Corp., the largest PC microprocessor chip vendor, plans to accelerate its move beyond the PC market and into higher growth areas, including the data center and Internet of Things (IoT). The plan also includes the elimination of 12,000 positions inside the company, or about 11% of its workforce.
Intel calls the restructuring an evolution of the company away from a focus on PCs—where the company has been slowly moving over the course of the last few years—and to cloud computing and connecting billions of smart devices to each other. Intel says the restructuring will provide a better long-term outlook, generate growth and in the end, make the company more profitable.
Brian Krzanich, CEO of IntelIntel’s primary growth has come from its IoT business and from the data center with memory and field programmable gate arrays, helping to create growth opportunities in these markets. Intel says these businesses generated $2.2 billion in revenue growth in 2015 and made up 40% of the company’s revenue and the majority of its operating profits. This helped Intel to offset its decline that has been happening in the PC market segment.
“Our results over the last year demonstrate a strategy that is working and a solid foundation for growth,” says Brian Krzanich, CEO of Intel. “The opportunity now is to accelerate this momentum and build on our strengths.”
In terms of the reduction in workforce, Intel will gradually decrease 11% of its employees through mid-2017 through site consolidations worldwide, a combination of voluntary and involuntary departures, and re-evaluation of programs. Intel says this will save the company $750 million this year and have an annual rate savings of $1.4 billion by mid-2017. Intel will record a one-time charge of about $1.2 billion in the second quarter of 2016.
