Intel axes 12,000 employees, 11% of its workforce

Intel Corporation today announced a restructuring initiative to accelerate its evolution from a PC company to one that powers the cloud and billions of smart, connected computing devices. Intel will intensify its focus in high-growth areas where it is positioned for long-term leadership, customer value and growth, while making the company more efficient and profitable.

The data center and Internet of Things (IoT) businesses are Intel’s primary growth engines, with memory and field programmable gate arrays (FPGAs) accelerating these opportunities – fueling a virtuous cycle of growth for the company. These growth businesses delivered $2.2 billion in revenue growth last year, and made up 40 percent of revenue and the majority of operating profit, which largely offset the decline in the PC market segment.

The restructuring initiative was outlined in an e-mail from Intel CEO Brian Krzanich to Intel employees.

“Our results over the last year demonstrate a strategy that is working and a solid foundation for growth,” said Krzanich. “The opportunity now is to accelerate this momentum and build on our strengths.

“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.”

While making the company more efficient, Intel plans to increase investments in the products and technologies that that will fuel revenue growth, and drive more profitable mobile and PC businesses. Through this comprehensive initiative, the company plans to increase investments in its data center, IoT, memory and connectivity businesses, as well as growing client segments such as 2-in-1s, gaming and home gateways.

These changes will result in the reduction of up to 12,000 positions globally — approximately 11 percent of employees — by mid-2017 through site consolidations worldwide, a combination of voluntary and involuntary departures, and a re-evaluation of programs. The majority of these actions will be communicated to affected employees over the next 60 days with some actions spanning in to 2017.

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.

Source: Intel Corporation

MacDailyNews Note: E-mail to Employees by Intel CEO Brian Krzanich

Subject: Today’s Announcement

Date: April 19, 2016

Since I became CEO nearly three years ago, I have been working with our leadership team and all of you to transform our company from a PC company to a company that powers the cloud and billions of smart, connected computing devices. The data center and Internet of Things businesses are now Intel’s primary growth engines, and combined with memory and FPGAs, form and fuel a virtuous cycle of growth. Together, these businesses delivered $2.2 billion in revenue growth last year, made up 40% of our revenue, and the majority of our operating profit.

Our results demonstrate a strategy that’s working and a solid foundation for growth. Our opportunity now is to accelerate our momentum and build on our strengths. But this requires some difficult decisions.

With that context, today we are announcing a restructuring initiative that will allow Intel to intensify our investments in the products and technologies that fuel our growth, and drive more profitable mobile and PC businesses.

We expect that this initiative will result in the reduction of up to 12,000 positions globally. This will be achieved by voluntary and involuntary departures, global site consolidation, and efficiency initiatives. The majority of these actions will be communicated over the next 60 days, with some spanning into 2017.

These are not changes I take lightly. We are saying goodbye to colleagues who have played an important role in Intel’s success. We are deeply committed to helping our employees through this transition and will do so with the utmost dignity and respect.

Today’s announcement is about accelerating our growth strategy. And it’s about driving long-term change to further establish Intel as the leader for the smart, connected world.
As we drive this transformation, there is an extraordinary opportunity ahead. We will emerge as a more productive company with broader reach, and sharper execution.

I know that many of you will have questions about these changes. You’ll hear more details from me, and from the rest of Intel’s leadership team, in the coming days and weeks. To get started, I encourage you to attend the Q2 BUM later today.

You’re also invited to listen to the company’s first-quarter earnings conference call with investors here. Information about these changes will also be available on Circuit

Thank you for your support. I look forward to talking with you all soon.

Brian

MacDailyNews Take: Ouch. Good luck to those affected.

Now, perhaps Apple will take matters further into their hands to ensure that their personal computing products, including Macs, remain unmatched regardless of outside issues:

In order to build the best products, you have to own the primary technologies. Steve felt that if Apple could do that—make great products and great tools for people—they in turn would do great things. He felt strongly that this would be his contribution to the world at large. We still very much believe that. That’s still the core of this company.Apple CEO Tim Cook, March 18, 2015

There is no reason why Apple could not offer both A-series-powered Macs and Intel-based Macs. The two are not mutually exclusive.MacDailyNews, January 14, 2015

SEE ALSO:
Apple in ‘advanced talks’ to acquire Imagination Technologies for PowerVR GPU – March 22, 2016
Apple’s taking big steps toward controlling even more primary technology – December 15, 2015
Apple buys former chip fab in San Jose, California – December 15, 2015
Apple operating secret laboratory in Taiwan to develop new, thinner displays for iPhone, iPad and Macintosh – December 14, 2015
Mac sales to grow in enterprise with new Apple A-series-powered Mac – October 14, 2015
Apple A-series-powered Macs are not only feasible, they may be inevitable – January 15, 2015
Why Apple dumping Intel processors would be disastrous – January 14, 2015
KGI: Apple is designing its own processors for Mac – January 14, 2015
Apple A9-powered MacBook Air? – December 16, 2014
Why Apple will switch to ARM-based Apple A-series-powered Macs – August 27, 2014
Intel-powered Macs: The end is nigh – August 4, 2014
Intel’s Broadwell chips further delayed; not shipping for most Macs until early-mid 2015 – July 9, 2014
Apple will inevitably drop Intel for their own A-series processors in the Mac – June 26, 2014
How long before Apple dumps Intel from MacBook Air? – June 26, 2013

26 Comments

  1. Intel’s biggest flub, passing on providing silicon for the iPhone, is still haunting the company.

    Let’s hope Intel does come out of this stronger. They are an American company with lots of American workers.

  2. Didn’t think of Intel as a sinking ship before but maybe they are. Apples A series processors are so much cheaper and have such a lower energy consumption profile, I can’t wait to buy and recommend computers and servers using non-Intel processors.

  3. Big layoff. My question is how that will affect processor development in the future. It already seems to be that Intel are not releasing new chipsets for pcs with the same frequency as before.
    Apple’s transistion into adapting A-series chips for using on macs is before more likely.

  4. This is the way tech jobs wind up off-shore. Abandon a line of business that is not profitable here, and it will reappear in China at lower cost of manufacture, and lower price.

    1. I watched how once big companies like IBM “shrunk.” What really happened is that they expanded overseas. IBM has over 400,000 employees worldwide, but it is estimated they only have 70,000 in the U.S.

  5. My guess is Apple is close to replacing Intel chips with their own . Not that it would cut into Intels bottom line so much, but what it says about their ubiquitousness on the computer side and the future or the x86

    1. OMFG. I thought that stupid thought and rumor was dead.

      No. Apple will not and cannot use their own RISC ARM chips to replace Intel CISC x86 chips. Never gonna happen. I’m not gonna go through the several reasons why all over again, again, again. Go read about CISC vs RISC and figure it out for yourself.

      1. Well it’s happening. Trust me. Apple cannot depend on Intel as they seem to be moving on. The PC market is no cutting it anymore. And Apple has to keep supplying their devices. It’s a done deal.

        1. 1) ARM (A series) chips are NOT as fast or capable as current Intel x86 chips. √
          2) The Mac platform is now thoroughly reliant on CISC x86 technology. It’s built into every Mac application and most of the operating system. √

          So no, it’s not happening. If that means future trouble for Apple’s Macs, then here we go! Trouble. Go learn some more about CPU tech please.

          1. It’s happening. Period. With the pc market in decline and dying Apple has to take matters into their own hands . It’s not about them wanting to, it’s because THEY HAVE TO.

            1. Don’t have to. OS X ran for years on power PC chips, a risc platform. Apple transitioned to x86 because they got tired of waiting for Motorola to ship 3ghz 64 bit processors way back when. OS X and the upcoming Mac OS are both UNIX derived and will run on anything if properly compiled. I assure you that in Apple Labs there is an apple book built with Axx processors that is running El Cap. Whether Apple will write an x86 compatibility layer remains to be seen though they have done this before… Twice.. Performance will be great as risc tends to be more efficient. Or in other words, have you tried an iPad Pro lately? It is one of the fastest internet computers you can buy. Change us a comin!

            2. Apple can do whatever the hell it wants with its OS code.

              Whether any 3rd party developers bother to follow along is another matter. Apple’s past architecture revisions resulted in irreversible losses in premier software developers. And while it is true that there are more Mac developers than ever before, many pros are jumping ship. It’s just bad business to have to start all over whenever Apple decides it’s time to quit. Xserve, OSX Server, Aperture, FCP, Quicktime, … there’s a limit to how many products Apple can abandon without warning before enterprises just avoid Apple for good.

              The ball’s in Apple’s court. If it wants to improve the Mac platform, there’s nothing stopping it. Intel chips are by far the best performing for processor-intensive tasks no matter how you stack it up. Pros don’t care about battery life, they plug in. What they need is rock solid reliability and performance. Intel offers that. Apples A-chips offer ultra portability and nothing more.

            3. Yea, and running on PowerPC nearly killed them.
              Software developers were dragged along to the transition kicking and screaming. But they (most of them) went along because they where moving to the industry standard. If Apple were to try and move AWAY from the standard, too many would not follow.
              Apple isn’t that dumb.

  6. These actions drive long-term change to further establish Intel as the leader for the smart, connected world

    NO. Intel is NOT the leader in the smart, connected world. So how is Intel supposed to ‘further establish’ it? If only Intel had done the Atom CPUs right, without all the CISC and x86 baggage. That blunder seriously damaged their future.

    – – And no, I’m not going to get into another flame war over the failure of the Atom CPU. So don’t bother trying please.

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