Intel has announced that it is giving more that 11 percent of its employees their pink slips by next year. This decimation will come through site consolidations worldwide, a combination of voluntary and involuntary departures, and a re-evaluation of programmes.
Intel expects its restructuring 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.
In the official announcement Intel described it as a “restructuring initiative” which will help it evolve 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 move is remarkably similar to that which has gotten IBM into so much trouble. Intel sees the data center and Internet of Things (IoT) businesses are Intel’s primary growth engines. However these particular technologies are not making up for the cash which is been lost to the hardware business.
Intel said that memory and field programmable gate arrays (FPGAs) accelerating these opportunities and “fueling a virtuous cycle of growth for the company.”
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. 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. I am confident that we’ll emerge as a more productive company with broader reach and sharper execution.”
Chipzilla 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.