SANTA CLARA – Intel Corporation has announced a restructuring initiative that will cut 12,000 jobs or 11% of its total workforce.
Intel is seeing a decline in its chip business that powers personal computers and moving to one that powers the cloud and billions of smart, connected computing devices. Intel said this restructuring 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.
The company said the cutbacks will be completed by mid-2017 through site consolidations worldwide, a combination of voluntary and involuntary departures, and a re-evaluation of programs. Affected employees will be notified 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.
“Our results over the last year demonstrate a strategy that is working and a solid foundation for growth,” said 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.”
The data center and Internet of Things (IoT) businesses are Intel’s primary growth engines, with memory and field programmable gate arrays (FPGAs) accelerating these opportunities – fueling a virtuous cycle of growth for the company. These growth businesses delivered $2.2 billion in revenue growth last year, and made up 40 percent of revenue and the majority of operating profit, which largely offset the decline in the PC market segment.
Intel reported first quarter revenues of $13.7 billion, up 7% from last year, and net income of $2.0 billion. Computing group revenue was down 14% from the previous year.