Intel to Eliminate 12,000 Jobs On Plunge in PC Demand

Intel, the largest semiconductor maker in the world announced on Tuesday it would lay off 12,000 employees which represents close to 11% of its entire workforce, as the company continues reeling from the long-term downturn in worldwide demand for PCs.

Brian Krzanich the CEO at Intel announced the job cuts as part of the company’s larger restructuring, which is to result in a charge of $1.2 billion.

Intel reported as well earnings for its first quarter that were lower than had been expected and lowered its estimate for revenue for the full year.

Krzanich said Intel is known worldwide as the PC company and it was time to make a transition and push Intel over to a supplier of chips for products such as smartphones, sensors, computing and other types of devices.

The restructuring of Intel is the most recent evidence of how tech bellwethers have navigated out of need to shift into the more flexible and diverse tech world that was created by mobile computing devices connecting to cloud computing systems.

For example, on Monday IBM posted lower revenue and profit, including a drop of 22% in computing hardware sales.

Microsoft, which on Thursday will report its quarterly financial results, had over the past few years changed strategy from PCs software toward computer servers in a mix that involves far more software rented for use in its cloud system.

PC maker Dell went private during 2013. Hewlett Packard spun off into two separate companies in 2015. One is focusing on corporate computing while the other makes printers and PCs.

Last September HP also announced that it would have more than 30,000 layoffs.

In Intel, Krzanich became CEO nearly three years ago. During much of that period, he has talked of moving the company towards new areas.

Of recent, a number of top executives left Intel and Krzanich brought new ones in from other companies.

The restructuring is being made to help Intel invest heavily in new areas such as chips that power connected devices.

Yet Intel is still receiving 60% of overall revenue from its chips that supply PCs and profit margins that are lower than in data center chips it other big business.

 

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