Intel to Lay Off 12%, Focus on IoT & Data Centers

Intel has laid off 12% of its workforce on the back of forecast weaker sales for the rest of the year.

The cuts will hit 12,000 employees around the world and take until mid-2017 to complete. Intel Corp. (Nasdaq: INTC) will record a $1.2 billion charge in the second quarter because of the actions. The company expects the layoffs to deliver $750 million in savings this year and annual savings of $1.4 billion by mid-2017.

The chipmaker is trying to move from being a PC-based business to one that caters more to cloud computing, data centers and the Internet of Things (IoT). Intel says in a statement that the data center and IoT markets are its "primary growth engines" now, with memory and field programmable gate arrays (FPGAs) "accelerating these opportunities." FPGAs are chips that can be programmed in the field to perform specific tasks. (See Intel Closes $16.7B Altera Acquisition.)

"These actions drive long-term change to further establish Intel as the leader for the smart, connected world," said Intel CEO Brian Krzanich in the statement. "I am confident that we'll emerge as a more productive company with broader reach and sharper execution."

The company is describing the move as its "evolution" from its bread and butter, the PC business, where sales are declining.

The widespread planned layoffs, however, aren't the only signs that CEO Krzanich is more determined to put his own stamp on the iconic chipmaker. (See Intel Founder Andy Grove (1936-2016).)

The company recently announced that IoT boss Doug Davis is retiring, and mobile leader Aicha Evans is reportedly leaving after less than a year on the job. (See Intel's IoT & 5G Bosses Leaving.)

The layoffs and their rationale might come as a surprise to some. Intel's CFO, Stacy Smith, said as recently as January that the worldwide PC market was "healthy."

— Dan Jones, Mobile Editor, Light Reading