According to Reuters, Intel spokesman Chris Kraeuter stated that the company will be cutting 5% of their workforce of 107,000 employees. This comes hot on the heels of the company reporting their relatively mediocre earnings for 2013 (while still quite profitable) and expectations for a flat 2014. There was also an announcement this week that they would keep a new cutting-edge fab in Chandler, Arizona closed until further notice in order to reduce their operating expenses. "This is part of aligning our human resources to meet business needs," spokesman Chris Kraeuter told Reuters on Friday. The job reductions may include early retirement, attrition and other options, Kraeuter added.
Considering the overall size of the company and the 5% cut, I suspect that many of these cuts will be done through early retirements rather than layoffs. I think that this will allow Intel to let some blood that they no longer need, perhaps in divisions that they no longer see any growth occurring. The truth is, like we’ve said before, Intel needs to focus squarely on mobile and enterprise and to improve their execution on their key architectures that drive their mobile and enterprise products.
Intel also said that it plans to quadruple their volume of chips for tablets to about 40 million units and carve out market share for the company. However, they still remain mum on how they plan to attack the mobile segment other than stating their plans for 64-bit Atom chips this spring. Surely they need to get things moving on their connectivity side of things and get design wins, which are ultimately the most important things for a mobile SoC’s success. And with the rumor that NTTDoCoMo possibly dropping Samsung’s and Intel’s Tizen phone, that could mean fewer design wins for Intel at MWC 2014 in Barcelona. They also stated that they plan to subsidize their partners’ and OEM’s designs to help them make better products which will likely impact their overall gross margin.
This has without a doubt been a pretty bad week for Intel, and no doubt morale is pretty low within the company, but I believe that these are temporary setbacks that are necessary for them to readjust. We need a competitive Intel in the mobile space to pressure Qualcomm’s and Samsung’s dominance. Not to mention ARM’s overall dominance of the mobile space in both smartphones and tablets.