Intel slashes 12,000 jobs as move to cloud and Internet of Things continues

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Chipmaker reports steady revenues, but is taking a $1.2bn restructuring charge as it pushes cloud and IoT ‘growth engines’

Intel will be cutting 12,000 jobs this year, the equivalent of 11 percent of its entire workforce.

The restructuring will set Intel back $1.2 billion (£830m) as the company attempts to reposition itself for cloud and the Internet of Things amid a slumping PC market.

In a statement, Intel said it 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”.

Foundation

Our results over the last year demonstrate a strategy that is working and a solid foundation for growth,” claimed CEO Brian 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.”

These “strengths”, as Intel outlined in its first quarter results on Tuesday, are its data centre and Internet of Things (IoT) businesses. Calling these businesses its “primary growth engines”, Intel hauled in $2.2 billion (£1.5bn) in revenue growth last year from data centre and IoT products, which accounts for 40 percent of its total revenue and a majority of its operating profit.

Data-centreIntel will also boost investments in its memory, connectivity, gaming and home gateway businesses.

Diversity

But the 12,000 job cuts will hit through to mid-2017, with redundancies coming from most business units. Intel said they would be a mixture of voluntary and involuntary departures.

The majority of these actions will be communicated to affected employees over the next 60 days with some actions spanning in to 2017,” said Intel.

Still, the company’s diversity programme, which looks to set up a hiring programme to make its workforce more diverse, seems not to have been forgotten.

Diversity and inclusion are integral to how we operate, and we’re not changing our commitment to our diversity goals,” William Moss, an Intel spokesman, told VentureBeat.

We intend to continue to share our results, progress and learnings publicly in our upcoming Diversity in Technology: Mid-year Inclusion Report.”

Intel’s bad news for employees comes as industry tracker Gartner said that PC sales in EMEA have fallen 10 percent year-over-year, with sales dropping 9.6 percent globally.

However, Intel still reported computing revenues of $7.5 billion (£5.22bn) for its Q1 earnings, a two percent hike year-over-year. Intel’s data centre and IoT divisions saw a revenue increase of nine percent and 22 percent respectively. Intel’s total revenue for Q1 hit $13.7 billion (£9.53bn) , a 7 percent rise year-over-year.