Intel, the company that's responsible for producing the processor that powers just about every modern PC, has announced plans to cut back 12,000 jobs from its workforce, or 11% of all employees.
The news comes as part of a restructuring, as the firm claims that it plans to become a company "that Powers the Cloud and Billions of Smart, Connected Computing Devices". There will also be a one-time restructuring fee of $1.2 billion.
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.
It looks like the majority of employees affected by the lay-offs will be informed about it within 60 days, although it could be as late as 2017. The company plans to have completed this by mid-2017.
Brian Krzanich, CEO of Intel, stated, "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."
This is a major restructuring for Intel. The firm's focus has long been powerful desktop processors, always finding itself unable to penetrate the mobile market. With today's news, there's no mistaking Intel's desire to power the next billion devices.
The restructuring centers on 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". It's interesting to see that the firm hasn't included smartphones on that list, although we could only speculate why that is.
Krzanich added, "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."