Newspaper article International New York Times

Fading PC Demand Takes a Toll on Intel ; Firm to Cut 11% of Jobs as Chip Industry's Focus Shifts to Smartphones

Newspaper article International New York Times

Fading PC Demand Takes a Toll on Intel ; Firm to Cut 11% of Jobs as Chip Industry's Focus Shifts to Smartphones

Article excerpt

The company, the largest semiconductor maker, will lay off 11 percent of its work force as it shifts to supplying chips for phones and other devices.

Intel, the world's largest maker of semiconductors, plans to lay off 12,000 people, about 11 percent of its work force, as it continues to reel from a long downturn in global demand for personal computers.

The company's chief executive, Brian Krzanich, announced the layoffs as part of a larger corporate restructuring on Tuesday, which will result in a $1.2 billion charge. Intel also reported lower-than-expected first-quarter earnings and reduced its projected revenue for the year.

"Intel has been known as the PC company," Mr. Krzanich said in an earnings call with Wall Street analysts. "It's time to make this transition and push the company all the way over" to supplying chips for things like smartphones, cloud computing, sensors and other devices.

Intel's restructuring is the latest evidence of how onetime tech bellwethers have had to navigate a rapid shift into the more flexible and dispersed tech world created by the combination of mobile computing devices connected to cloud computing systems.

On Monday, for example, IBM reported lower profit and revenue, including a 22 percent drop in sales of computing hardware.

Microsoft, which will report its financial results on Thursday, has over the past several years changed its strategy from software in PCs toward computer servers, a mix that involves much more software rented over its giant cloud system.

Dell, a big PC maker, took itself private in 2013.

Hewlett-Packard divided into two companies last year, one focused on corporate computing and one that makes PCs and printers. Last September, HP announced about 30,000 layoffs.

At Intel, Mr. Krzanich became chief almost three years ago, and over much of that time he has talked about moving the company into new areas. More recently, top executives have left the company, and Mr. Krzanich has brought in executives from other companies. The new restructuring is intended to help Intel invest more heavily in its new segments, such as chips to power connected devices.

Yet Intel still gets 60 percent of its revenue from chips supplied to PCs, and its profit margins there are not as good as in data center chips, its other major business. …

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