Job cuts herald new focus for Intel

1 min read

Intel has built its business on domination of the PC market. Over the years, the company has used a range of practices – some of which resulted in close attention from regulators – to push its competitors to the margins.

But it has always had ambitions beyond PC processors – getting into the mobile market, for example. While it has tried a number of times to reinvent itself, the PC market continued to focus its attention. Until now.

With demand for PCs of most formats declining rapidly, the company is embarking on what appears to be one of the most significant reorganisations in its history. While the eye catching part of last week’s announcement was the loss of 12,000 jobs – 11% of its workforce. Where those 12,000 jobs will go has yet to be announced, but Intel says it is now a data centre and IoT company.

Chief executive Brian Krzanich outlined the ambitions when he said Intel wants to own data centre racks ‘from top to bottom’. It already dominates the data centre processor market; now, it wants to get its hands on other parts of the sector.

One of the important elements in this strategy was the acquisition of Altera and its FPGA technology is being blended with Intel’s data centre processors in a move to boost performance. The first such products are expected later this year.

But there is likely to be more pain to come. One of Krzanich’s recent moves was to hire Murthy Renduchintala, who ran Qualcomm’s chip operations. By all accounts, Renduchintala, who is in charge of most of Intel’s product businesses, isn’t happy with what he’s found. A leaked note to Krzanich cited ‘a lack of product/customer focus’, as well as ‘schedule and competitiveness gaps’.

What impact Renduchintala will have remains to be seen, but he appears to be shaking things up – and some expect further pain. Already, a number of long term Intel people who reported to him have left the company. That is leading observers to believe that Intel is set to ‘parachute in’ outsiders to provide new leadership.

But the next CEO may already have been identified. Intel’s CFO Stacy Smith is taking on a role that exposes him to manufacturing, sales and operations.