Intel has announced a major corporate restructuring that will see 11 percent of its workforce laid off as the company intensifies its focus on its data center and smart connected computing businesses.
The move is being billed as a profitable and efficient evolution of the company away from its traditional PC sector base toward more high-growth areas, broadly defined as its cloud-powering hardware and Internet of Things businesses. These areas reportedly made Intel $2.2 billion in revenue growth last year, making up 40 percent of its operating profit and offsetting its decline in the PC market.
Combined with its gaming, home gateway, memory and connectivity businesses, the initiative will fuel a "virtuous cycle of growth", said Intel, but the move comes at the cost of up to 12,000 jobs globally. The company said the layoffs will be completed by mid-2017 through a combination of voluntary and involuntary departures as it re-evaluates its programs and consolidates its sites worldwide.
Intel forecasts that the initiative will deliver $750 million in savings in 2016 and annual run rate savings of $1.4 billion by the middle of the following year.
While Intel's press release makes no mention of its latest microprocessor uptake in the PC market, the company did recently confirm the end of its highly successful decade-long "tick-tock" strategy of annually delivering new processors, after chip updates stretched beyond the yearly cycle in recent generations and began affecting Apple's product launch cycles. The launch of Intel's Kaby Lake 14-nm microarchitecture was delayed to the second half of 2016 after Skylake suffered similar setbacks in 2015.
Semiconductor foundries have had increasingly tough times creating smaller process nodes as fabrication of smaller transistors has become increasingly expensive and complex. Intel has said it will now move to a new "Process-Architecture-Optimization" model for its current 14-nm node and next-generation 10-nm node family of chips.