You are currently viewing SemiWiki as a guest which gives you limited access to the site. To view blog comments and experience other SemiWiki features you must be a registered member. Registration is fast, simple, and absolutely free so please, join our community today!
"The cutbacks will reduce employment in some parts of the business by double-digit percentages, according to Intel insiders, amounting to thousands of job cuts across the company by the end of the year. The planned downsizing could begin soon after Intel reports its first-quarter financial results Tuesday, though sources say timing and specifics remain fluid.
Sources indicate this year's cutbacks will be considerably larger than layoffs last year, when Intel eliminated more than 1,100 U.S. jobs after anticipated sales growth failed to materialize."
Hope they can shake up/let go more executives on the top leadership positions instead of those foot soldiers. Otherwise, this kind of layoff will be repeating many times in the future.
QCOM really cut deep last year. I wonder is the modem business is at risk? Murthy certainly knows modems and he is not shy about cutting. I think Intel management had better read up on this one:
I have no idea whether modem/mobile business will be subjected to layoffs but I doubt the business as such will be abandoned. Intel considers wireless expertise to be critical for multiple technologies (IoT being one of them) so even if they do not get into iPhone 7 Intel might consider the technology critical enough to continue sustaining losses.
This is one of those key cultural differences. TSMC and Samsung rarely have layoffs, Intel regularly has layoffs. What Intel hopes to accomplish (which Americans on this board have all heard in one form or another, so I won't provide attribution; this is our business culture as much as Intels):
- "Cut the deadwood"
- "Prepare for future growth"
- "Rightsize the business for current market"
Another way to put it:
- "I have to hit earnings targets"
- "I forecast flat to down growth"
- "I have too much headcount for the amount of revenue"
Intel is a focused business. They don't have the benefits of diversification, as TSMC for example has. So the ups and downs are more severe. Samsung also has diversification among many electronics segments. I think Intel would be better off with some TSMC-style or Samsung-style diversification.
- "I have no clue how to be successful in the XYZ market. But I do have some extra cash in the bank. Let's try some major offense with our cash. Our amazing cash rebate and cash giveaway will help us to gain market share and kill our competitors. For example, $7 billion Contra Revenue initiative".
Intel is a focused business. They don't have the benefits of diversification, as TSMC for example has. So the ups and downs are more severe. Samsung also has diversification among many electronics segments. I think Intel would be better off with some TSMC-style or Samsung-style diversification.
Intel (NASDAQ:INTC): Q1 EPS of $0.54 beats by $0.07.
Revenue of $13.8B (+8.0% Y/Y) misses by $30M.
Expects Q2 revenue of $13.5B (+/- $500M), below a $14.16B consensus.
Expects mid-single digit 2016 revenue growth vs. prior guidance of mid-to-high single-digit growth. Consensus is for 5.3% growth.
Shares are halted.
Update: Intel also announces it's cutting up to 12K jobs (11% of its workforce) through a restructuring. A $1.2B charge is expected. $1.4B/year in cost savings are expected by mid-2017. Update 2: CFO Stacy Smith will be transitioning to a new role at Intel - he'll lead sales, manufacturing, and operations. A search has begun for a new CFO.
Update 2: CFO Stacy Smith will be transitioning to a new role at Intel - he'll lead sales, manufacturing, and operations. A search has begun for a new CFO.
"Intel Corporation today announced a restructuring initiative to accelerate its evolution from a PC company to one that powers the cloud and billions of smart, connected computing devices. Intel 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."
Those 12,000 Intel employees are like Intel made processors that are scheduled to be thrown into trash bin during major Intel upgrade. Those 12,000 human beings are paying the price for the wrong derision made by the top Intel executives and Intel's board.
We're trying to see what the impact will be to the Oregon economy, since Intel is the #1 employer in the state. In the next 60 days we will know more about the demographics and which groups were hit the hardest.
IMHO, Intel needs to start searching a new CEO and new Chairman. It's probably more urgent than finding a new CFO. Finding a new CFO is just a small patchwork that won't solve many fundamental problems accumulated in the past several years.
IMHO, Intel needs to start searching a new CEO and new Chairman. It's probably more urgent than finding a new CFO. Finding a new CFO is just a small patchwork that won't solve many fundamental problems accumulated in the past several years.
I share hist78's sentiment (among many here I'm sure). The first Intel job that should be cut is Brian Krzanich's. From an outsider's point of view, Intel's leadership seems to become complacent at the worst possible time. They seem to be on the verge of losing their technological edge to TSMC/Samsung. They've delayed Cannonlake (10 nm) until next year. They were too late to the mobile market, too arrogant with their custom foundry, quit the science fair and allowed too many of their competitors to grow strong while they sat on their hands.
Krzanich is partially responsible for bringing Intel to this fine mess. Deciding to cut 12,000 of his hard-working employees instead of handing in his resignation speaks volumes to what type of person he is. Running a great American company aground and getting paid $11+ million to do it is just despicable. Mr. Krzanich....how about at least sharing the pain & reducing your salary to $1 until you find a way to grow your mobile & non-desktop businesses?
It was just less than 3 years ago where their chairman (Andy Bryant) said:
I was personally embarrassed that we seemed to have lost our way.
Intel appears to be making the classic retreat upmarket, as described by Christensen. In doing so, they are sealing their fate - this is textbook disruption.
How things could unfold, if things continue to proceed by the book:
-Intel attempts to offset volume with price. Cost/performance curve of x86 PCs start to inflect. PC buyers stop seeing performance/dollar improvements.
-Opening is created at the low end of the PC market, as ARM continues to deliver performance/dollar improvements
-Chromebook sales increasingly shift to ARM
-Microsoft forced to respond with version of Windows 10 on ARM
-As performance of x86 alternatives continues to improve, the threat to datacenter becomes even more real
“The signature story of disruption reads as follows: an upstart low-end competitor displaces a much larger incumbent in a market, with the incumbent either retreating upmarket to higher margin/lower volume products or dying out altogether… The key point to remember is that disruption is a market/business phenomenon…”
That PC market recovery isn't coming, folks - at least not as more than a temporary blip. Intel believes its sales forecasts more than it believes analysts.
This is actually horrible news not just for Intel but for the tech sector in general, especially combined with the "peak iPhone" narrative for Apple and the struggles at Qualcomm. It's going to border on the 2001 telecom bust when it's all said and done.
Listened to the CC. My thoughts:
-Where TSMC is strength/strength, Intel is strength/weakness. Strength in earnings (blowout Q) but weakness in PCs being confirmed, once again, and perhaps with more finality.
-Seems they have a vision and plan, at last: "Connected cloud company" rather than "PC company". Visions are detail-light, and today they are light on details. Other than there will be massive layoffs.
-They have good results in niches of the client area, which doesn't sound like they are abandoning client altogether. 2-in-1, gaming PC will see focus. Things where there is innovation possibility. I welcome this, actually.
So where will Intel be in 5 years time? I think they will still be driving Moore's law, with a smaller MFG base; NM is gone, and one more site (possibly). I think one of the other VF sites may become a memory site. Memory is becoming a growth driver for Intel over the next 5 years, and is a volume business (to counts point; I think volume is shifting to memory so Intel is not a classic Innovator's Dilemma situation; logic volume will be smaller with memory making up the difference). 3D Nand and 3D Xpoint both larger (but JV, not internal). Intel may be abandoning foundry; it wasn't mentioned in the CC at all. They are NOT abandoning wireless modems--that was mentioned as part of the "cloud company" vision--modems are the "connected" part. Modems are a risk in the new vision, but still think they are making the right decision, there seems to be a lot of potential for wireless modem innovation.
Even in the tech world where "old" is something brought to market 6 months ago, companies can become so self-centered they stop focusing on the light-speed changing landscape around them. The PC market did not suddenly decline. It had been in a state of disintegration for years. Intel was so focused on bringing out their next cool chip they ignored all the clear warning signs they needed to evolve. Between the massive move to mobile and now the fast tracking IoT, Intel had to hit the brakes and make a huge course correction. Unfortunate for those thousands of employees but the reality is the tech world today does not need such a large workforce. But it also does not need all those in leadership that failed to follow the market trends. Before the first Intel line worker walks out that door for the last time, the Intel board should fire the entire executive suite and bring in a new high energy, creative, innovative market focused team. Even in Silicon Valley, maneuvering the ship does not happen from the engine room, it happens from the wheelhouse!
Intel is a focused business. They don't have the benefits of diversification, as TSMC for example has. So the ups and downs are more severe. Samsung also has diversification among many electronics segments. I think Intel would be better off with some TSMC-style or Samsung-style diversification.
I think Intel lost focus on customers and lost focus on the technology itself, although it claimed to be a technology company.
Case #1: Intel turned down Apple's request to manufacture processors used in iPhones. The reason? Not sufficient volume to justify the effort. Unbelievable!!
"We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it," Otellini told me in a two-hour conversation during his last month at Intel. "The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do... At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought."
""It's important for me, as the CEO, that I tell our employees who it is that we have to compete with and who we're focused on, and I don't want them focused on ARM. I want them focused on Qualcomm or Nvidia or TI," he continued. "Or if someone like Apple is using ARM to build a phone chip, I want our guys focused on building the best chip for Apple, so they want to buy our stuff."
Case #2: Intel thought x86 is much superior and totally ignored the market demand for more power efficient SoC. Based on this judgement, Intel sold its own ARM based Communications and Application Processor business to Marvell for just $600 million in 2006. Intel can't recover ever since this mistake even with $1.4 billion to buy Infineon's wireless unit in 2010 and at least $7 billion money giveaway from 2013 to 2015 (Contra Revenue).
This is a very expensive mistake. Including R&D cost, my estimate Intel wasted at least $10 billion on this.
From these two cases, Intel clearly shows it lost focus on customers and technology.
