Intel will focus more on the market for data centers, internet of things, memory and FPGAs. These growth markets accounted for 40 percent of turnover in 2015. In order to be able to make more profit in the future, Intel wants to restructure. Twelve thousand jobs will be lost as a result.
By cutting the jobs, about 11 percent of the workforce worldwide, Intel expects to save $750 million in 2016. By mid-2017, that should have increased to $1.4 billion. With the reorganization, Intel aims to accelerate its plans to transform from a traditional PC company to one that powers the “cloud” and “billions of smart devices.”
Intel CEO Brian Krzanich, who has been at the helm since 2013, has written a letter to employees explaining the situation. He states that most actions will be communicated in the next 60 days. Some decisions regarding the reorganization will be made until 2017.
At the beginning of April, three people from the top of Intel already announced their departure. It is not clear, however, whether these departures have a direct connection with the reorganization. It has now been announced that CFO Stacy Smith will play a different role within Intel. He will focus on production and sales. It is not yet known who will be Intel’s new chief financial officer.
The news coincides with the announcement of the quarterly figures. Those are relatively good, because Intel recorded revenues of $13.7 billion in the first quarter of 2016. That is seven percent more than in the same quarter a year ago. Profits were $2 billion, three percent more than in 2015.
Intel generated the most revenue from the Client Computing Group in the past quarter: $7.5 billion, two percent more than a year ago. The Internet of Things Group made the biggest growth leap. Revenue was $651 million, up 22 percent from last year.
While Intel has a large market share in the PC market, the company has been unable to tap into the mobile device market in recent years. As the PC market is shrinking, Intel is looking to transform in order to remain profitable in the future. Intel has cut jobs several times in recent years. In 2015, 1100 workers were laid off and in 2014 there were 5000 jobs.