Intel said it will slash as many as 12,000 jobs as it continues to try to recover from an inability to exploit the smartphone era and a waning PC market.
The Santa Clara, California-based firm said it will hone its focus on the cloud and the Internet of Things as it restructures in an effort to save $1.4 billion a year. The layoffs, which represent 11 percent of its workforce, will be completed by mid-2017.
Intel will take a $1.2 billion charge in the second quarter due to the move.
Once the king of a booming market for PC chips, Intel has consistently failed to tap the mobile market. The company's mobile communications group lost a staggering $4.2 billion in 2014 and last year moved to cut $800 million in losses from the business. (It stopped breaking out its mobile losses last year.) Meanwhile, competitors such as Qualcomm, Apple and MediaTek have come to dominate a worldwide market for smartphone applications processors that rang up $20.9 billion in 2014, according to Strategy Analytics.
CEO Brian Krzanich told employees of the restructuring plan via e-mail, the company said. "These actions drive long-term change to further establish Intel as the leader for the smart, connected world," Krzanich wrote. "I am confident that we'll emerge as a more productive company with broader reach and sharper execution."
Some of Intel's woes appear to stem from its strategy of paying mobile device makers to use its older and more expensive chipsets in their gadgets, particularly tablets. Krzanich said last year that the company would continue to subsidize manufacturers but would do less of it than in previous years.
Despite its financial straits, though, Intel clearly has an opportunity to regain its footing in wireless. Rumors continue to circulate that Apple could use its chipsets in at least some models of the next iPhone, which would mark a much-needed win. And the company is well positioned to emerge as a leader in a worldwide market for IoT chips that will grow from $4.58 billion last year to $10.78 billion by 2022, according to a recent forecast from MarketsandMarkets.
- see this Intel press release
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