Intel has poached a leading executive from Qualcomm to lead a major new business unit that will include the chip giant's activities in the computing, Internet of Things (IoT) and software and services markets.
Previously executive vice president at Qualcomm Inc. (Nasdaq: QCOM), Venkata Renduchintala has been named president of Intel Corp. (Nasdaq: INTC)'s new Client and IoT Businesses and Systems Architecture Group.
The new division comprises Intel's existing Client Computing, IoT and Software and Services units, which together generated about 64% of Intel's sales in its recent third quarter, as well as the smaller Platform Engineering and Design & Technology Solutions units.
That puts Renduchintala in charge of all of Intel's major divisions bar the Data Center Group, which accounted for about 29% of the roughly $14.5 billion in revenues that Intel reported for the third quarter.
In a statement published on Intel's website late last week, Intel CEO Brian Krzanich said the restructuring and appointment would "better position" Intel for growth.
The news came just a day after Intel announced at its Annual Investor Meeting an increase in its quarterly cash dividend and said it expected revenues to grow at a "mid-single digits" rate in 2016.
Of the various units that Renduchintala will lead, IoT is expected to be a "growth engine" for Intel next year, and Krzanich will hope the former Qualcomm executive's background with one of the world's biggest mobile chip manufacturers will help Intel take full advantage of opportunities here.
As Intel pointed out in its statement, Renduchintala has worked for many years in the system-on-a-chip, mobile and IoT areas and will be tasked with ensuring these are more closely aligned within Intel, which faltered with its earlier efforts to become a force in the mobile market. (See Intel Chief Defends Huge Mobile Losses.)
Intel has recently made a far better stab of the IoT opportunity, however, and reported 10% growth in revenues at its IoT unit in the third quarter, to $581 million, compared with the same period last year.
"Bringing together the formidable talent into this new organization will enable Intel to accelerate progress in segments already at significant scale and with continued strong prospects for growth," said Renduchintala in a statement on his appointment.
He'll also get the chance to develop Intel's IoT portfolio further once the acquisition of Altera is completed. (See Intel to Buy Altera for $16.7B.)
In his most recent role at Qualcomm, Renduchintala served as co-president of Qualcomm CDMA Technologies (QCT), making him partly responsible for the company's semiconductor business in the computing, mobile and "adjacent" segments.
Qualcomm last week revealed that Cristiano Amon, who was previously the other co-president of QCT, is now the unit's sole president, having taken over Renduchintala's responsibilities.
According to a report from the Wall Street Journal, Renduchintala's move to Intel was prompted by a Qualcomm decision several months ago to have only one QCT president.
San Diego-based Qualcomm is one of several manufacturers that licenses designs from the UK's ARM Ltd. in its mobile communications chips.
Intel has failed to dislodge the ARM-based manufacturers despite a concerted attempt to position itself as a mobile communications alternative and last year it wrapped its underperforming mobile communications group into its PC business to form the current Client Computing division.
Although it no longer breaks out mobile figures separately, the company is still trying to boost profitability in this area and recently claimed to be making good progress in that regard.
"We remain solidly on track to our previously committed goal to improve mobile profitability by $800 million," said Krzanich during Intel's third-quarter earnings call with analysts, according to a Seeking Alpha transcript. "Over 75% of that goal has already been realized to date."
Intel's third-quarter revenues were the same as a year earlier, with growth at the Data Center, IoT and Software and Services businesses failing to offset a decline in the much bigger Client Computing group.
Pressure in that area led to a 6% decline in net income, to $3.1 billion, and saw Intel's gross margin shrink to 63%, from 65% a year earlier.
Intel is guiding for a gross margin of 62% "plus or minus a couple of points" in 2016.
— Iain Morris, , News Editor, Light Reading