Intel is slashing 12,000 jobs, about 11 per cent of its workforce worldwide, to cope with the drop in personal computer sales.
The job cuts, the deepest in a decade, come at a time when ICD figures show PC sales dropped 9.6 percent in the first three months of the year, the sixth consecutive quarterly decline. Sales are now back at 1997 levels.
This is a problem for Intel which draws 55 per cent of its revenues from selling to the PC market.
Intel’s big headache is that it doesn’t sell chips to Apple and Samsung, they make their own.
Intel’s second-quarter revenue will be about $13.5 billion, the company said in a statement. That below the analyst estimates of $14.2 billion.
Intel is now looking at new sources of growth after its acquisition of McAfee in 2011 and Altera last year.
Intel has also been investing in its mobile-chip business for more than 15 years, and is making some money out of smartphones and tablets. In 2014, the last year Intel broke out results for the mobile division, that division posted an operating loss of $4.2 billion.
But the job cuts have signaled to the market that Intel will now be focusing on these new growth opportunities.