Intel Announces Major Workforce Restructuring: 11% of Workforce to Be Cut Over Next Year

Ahead of today’s Q1 2016 earnings release and call, Intel has announced that they are going to be cutting a significant number of jobs over the next year. The job cuts come as part of Intel’s larger and ongoing restructuring efforts, as the company grapples with an overall soft PC market and continued struggle to carve out a larger piece of the mobile market. Ultimately Intel’s looking to invest in what they consider to be high-growth areas, which means laying off employees in stagnant business units while making other investments in those areas that are seeing continued growth.

The job cuts themselves are expected to involve up to 12,000 employees, or about 11% of the company’s workforce. Intel will be eliminating positions through a combination of both voluntary and involuntary layoffs, and in the process will be consolidating the remaining workforce and their respective sites. Intel expects the bulk of the layoffs to occur within the next 60 days, with the entire process stretching into mid-2017.

The company’s pre-earnings announcement does not state where these layoffs will come from, and we’re expecting at least some additional detail to come out of the company’s earnings call which is still on-going. However the company is reiterating what markets and businesses they see as growth opportunities and will be investing into for the future, which offers some basic guidance on what the company sees as their most important businesses. Intel’s Data Center and Internet of Things businesses are specifically being cited as their stand-out businesses, which combined with memory and FPGAs provided 40% of the company’s revenue and a majority of their operating profit. Meanwhile in the consumer/client market Intel has seen good returns on 2-in-1s, gaming and home gateways. Conversely, the overall (client) PC market is still in decline, and I expect that a number of the cuts will be centered on that.

Finally, Intel has also detailed the costs of their restructuring. The company will incur a one-time charge of $1.2 billion in Q2, with this presumably being a significant number of severance payments. In turn, the company expects to save $750 million this year, with an annual run rate savings of $1.4 billion per year after the last of the layoffs are completed in mid-2017.

We’ll update this article later today with more information once it comes out of Intel’s earnings call. Ultimately the soft PC market has been a continuing trend for Intel over the past few years, so that we’re seeing Intel react to it now is not unexpected. However it will be important to see just how the layoffs are organized – for example, if Intel makes much in the way of cuts in the fab business – as Intel is a large company. What this means for future client PC investments, mobile, could prove to be significant.

Update: Intel’s earnings call has shed a bit more light on the restructuring, but Intel is not spelling out exactly where the bulk of the cuts are coming from at this time.

Overall Intel did reiterate that although the client business has been weak, the company’s restructuring plans will be touching more than the client business. The impact to the client business then is that it is being refocused via the restructuring, hence the earlier comments on what Intel sees as the client growth markets. Undoubtedly aspects of the client business are in the crosshairs given the continued slowness in the market, but Intel isn’t saying too much more than that.

The company has also made it clear that they’re not backing off on fab/manufacturing investments in the near future. Capital expenditures on 10nm and 3D NAND continue untouched even with the restructuring, and overall Intel’s technology cadence plans have not changed. Farther ahead, the company has indicated that they are being mindful of their capable competition, and that they need to stay ahead of them, including getting back to a two-year cycle if at all possible.

Finally, Intel has offered a bit more information on the timeline for the restructuring itself. While the majority of the notices to employees will go out in 60 days, the projection is that only about half of the layoffs will be completed by the end of this year, which implies the rest will happen in H1 2017. Part of this comes down to the fact that while Intel has a target number for employment, they have not decided whether they will end any product lines entirely. Intel is in the process of undergoing a complete review of the business to identify any products the company may want to cease, and Brian Krzanich has said that when the review is done there’s likely to be a few products that get flagged.

Intel Unveils New Low-Cost PC Platform: Apollo Lake with 14nm Goldmont Cores

This week, at IDF Shenzhen, Intel has formally introduced its Apollo Lake platform for the next generation of Atom-based notebook SoCs. The platform will feature a new x86 microarchitecture as well as a new-generation graphics core for increased performance. Intel’s Apollo Lake is aimed at affordable all-in-ones, miniature PCs, hybrid devices, notebooks and tablet PCs in the second half of this year.

The Apollo Lake system-on-chips for PCs are based on the new Atom-based x86 microarchitecture, named Goldmont, as well as a new graphics core that features Intel’s ninth-generation architecture (Gen9) which is currently used in Skylake processors. Intel claims that due to microarchitectural enhancements the new SoCs will be faster in general-purpose tasks, but at this stage Intel has not quantified the improvements. The new graphics core is listed as being more powerful (most likely due to both better architecture and a higher count of execution units), but will also integrate more codecs, enabling hardware-accelerated playback of 4K video from hardware decoding of HEVC and VP9 codecs. The SoCs will support dual-channel DDR4, DDR3L and LPDDR3/4 memory, which will help PC makers to choose DRAM based on performance and costs. As for storage, the Apollo Lake will support traditional SATA drives, PCIe x4 drives and eMMC 5.0 options to appeal to all types of form-factors. When it comes to I/O, Intel proposes to use USB Type-C along with wireless technologies with Apollo Lake-powered systems.

From the IDF presentation, Intel shares only a few brief details regarding its new Apollo Lake design platform, but does not disclose exact specifications or performance numbers. At this point, based on 14nm Airmont designs, it is pretty safe to assume that the new SoCs will contain up to four Goldmont cores in consumer devices but perhaps 8+ in communications and embedded systems. Intel has not specified the TDP of its new processors but claims that power management features of the platform will help it to improve battery life compared to previous-gen systems (which might point to a Speed Shift like arrangement similar to what we see on Skylake, perhaps). While Intel does not reveal specifics of its own SoCs, the company shares its vision for the upcoming PCs powered by the Apollo Lake platform.

Firstly, Intel believes that the upcoming affordable PCs, whether these are all-in-one desktops, miniature systems, 2-in-1 hybrids, laptops or tablets, should be very thin. According to their market research, this will make the devices more attractive to the buyer, which is important. To make systems thinner, Intel traditionally proposes to use either M.2 or solder-down eMMC solid-state storage options instead of 2.5” HDDs/SSDs. In addition, the company believes that it makes sense to use solder-down Wi-Fi, instead of using a separate module. Intel seems to be especially proud with the compactness of the Apollo Lake SoC (as well as other core components) and thus the whole platform, which is another factor that will help to make upcoming systems thinner. For the first time in recent years, Intel also proposes the use of smaller batteries, but devices can maintain long battery life by cutting the power consumption of the entire platform. While in many cases reduction of battery size makes sense, it should be noted that high-resolution displays typically consume a lot of energy, which is why it is hard to reduce the size of batteries, but maintain the visual experience along with a long battery life.

Secondly, PCs based on the Apollo Lake should be very affordable, which is why Intel’s reference core components design can be used for different form-factors (AiO and mobile). Additionally, the company reveals a number of BOM (bill of materials) savings opportunities, which are a result of higher level of SoC integration as well as a recommended choice of components. In the slide above, using all the savings can make a difference in BOM for between $5.55 and $7.35, which could mean double memory or a better display for the same price for the new generation.

Intel’s reference design for Apollo Lake-based PCs seems to be a tablet/2-in-1 hybrid system with an 11.6” full-HD (1920×1080) 10-point multi-touch display, 4 GB of LPDDR3-1866 memory, 64 GB M.2 SATA3 SSD or 32 GB eMMC storage, an M.2 wireless module supporting 802.11ac, an optional M.2 LTE modem, an integrated USB 2 camera, a host of sensors (accelerometer, ambient light, proximity detection, and magnetic switching) as well as a USB Type-C connector supporting USB power delivery and alternate modes. Such reference design can power not only mobile, but also Aan IO and even small form-factor desktop PCs. Still, given the fact that we are talking about low-cost systems, do not expect retail computers to feature multiple storage devices and LTE modems. However, PC makers may opt for more advanced displays as well as better integrated cameras, or an SI might plump for a half-price ‘Macbook-like’ device design using Type-C, albeit on the Atom microarchitecture. This is Intel’s vision forthe next generation of Chromebooks: the ‘cloud book’ market.

PCs based on Intel’s Apollo Lake platforms will emerge in the second half of the year and will carry Celeron and Pentium-branded processors. At present, entry-level notebooks (which Intel calls Cloudbooks) offer 2 GB of memory, 32 GB of storage, 8+ hours of battery life and ~18mm thick designs. With Apollo Lake, OEMs should be able to increase the amount of RAM and/or storage capacity, make systems generally thinner, but maintain their $169 – $269 price-points. Intel also believes that its Apollo Lake presents great opportunities to build 2-in-1 hybrid PCs (convertibles) and capitalize on higher margins of such systems.

Traditionally, Intel discusses options and its vision, but not actual PCs, at its IDF trade-shows. It remains to be seen whether PC makers decide to build low-cost convertibles or ultra-thin notebook designs, or will stick to more traditional clamshell notebooks. In fact, we will learn more about BTS (back-to-school) plans of major PC OEMs regarding Apollo Lake at the upcoming Computex trade-show in early June. There’s also IDF San Francisco in August where Intel may open some lids on how the new Goldmont core differs from Airmont.

Gallery: Intel Unveils New “Apollo Lake” Low-Cost PC Platform

AMD Pre-Announces Bristol Ridge in Notebooks: The 7th Generation APU

For anyone tracking AMD’s family of Accelerated Processing Units (APUs), the last generation Carrizo was launched back in the middle of 2015. This was based on the fourth iteration of the Bulldozer module design (the cores are codenamed Excavato…