Report: Intel Reorg to Merge PC, Mobile Chip Units

Intel (INTC) plans to consolidate its PC chip and mobile processor operations under one roof, according to a Wall Street Journal report based on an internal email from chief executive Brian Krzanich to employees, and subsequently confirmed by the chip maker.

According to the Journal’s report, the reorganization, slated to take effect early in 2015, consolidates the PC and mobile operations under Kirk Skaugen, who currently oversees Intel’s PC Client Group and will take over the new Client Computing Group. Herman Eul, Intel’s mobile and communications unit general manager, has been tasked by Krzanich to head the transition at least through Q1 2015, at which point he will be reassigned, the report said.

Eul’s group will be disbanded, with mobile processor development teams shifted to the new Client Computing Group and others moved to a new wireless research and development group.

“The market continues to evolve rapidly, and we must change even faster to stay ahead,” Krzanich said in the email.

An Intel spokesperson confirmed the reorganization, as PC World reported. “Industry-wide, the lines have been blurring,” the spokesperson said. “The question is whether we’re organized to map to where the market is going.”

The product segmentation Intel has maintained—Core processors for PCs and Atom chips for smartphones and tablets—now is filled with more gray areas owing to the volume of hybrid laptop/tablets hitting the market.

Despite Intel’s besting analysts’ estimates in Q3 with an 8 percent increase in sales and a 12 percent bump in net income, its mobile unit, which handles smartphones and tablets along with other mobile communications technology, continued to struggle, producing a mere $1 million in sales for the quarter amid a $1.04 billion operating loss and a nine-month leakage of more than $3 billion.

By contrast, Intel’s PC Client Group generated $9.2 billion in sales for a 9 percent year-over-year increase, while its Data Center Group compiled $3.7 billion in sales amounting to a 16 percent spike from the same time last year.

Separately, Krzanich told investors at the chip maker’s annual meeting that boosts in the company’s future profits will come from leveraging its core strengths in PCs and data centers to maximize its opportunities in complementary market segments, such as its manufacturing capabilities, architecture and shared IP.

Intel said that its full-year 2015 business outlook includes revenue growth in the mid-single digits and gross margins of about 62 percent.