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Intel to merge struggling mobile chip unit into its PC chip business

by Mark Tyson on 18 November 2014, 11:05

Tags: Intel (NASDAQ:INTC), PC

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Intel CEO Brain Krzanich has announced, in an email sent to employees on Monday, new company plans to merge its loss-making mobile chip unit with its profitable PC business early next year, writes the Wall Street Journal. "The market continues to evolve rapidly, and we must change even faster to stay ahead," Krzanich asserted in the email.

It is well known that Intel has struggled to gain a foothold in mobile computing, but even worse for the business its tablet and smartphone chip-making division has lost billions in the recent months. Intel's mobile communication group posted a $1 billion operating loss in the third quarter of 2014, with revenues sliding to just $1 million from $353 million in the same period a year ago. In contrast, the company's PC business posted an operating profit of $4.12 billion, and a 9 per cent increase in revenue to $9.19 billion.

The reorganisation of the two units reflects not only Intel's efforts to expand its chip sales for mobile devices, but also a changing market in which the lines dividing consumer electronics devices blur, and it becomes evident that tablets and laptops are converging. "The lines are blurring between PCs, tablets, phablets and phones," Chuck Mulloy, Intel's spokesman said. "The idea is to accelerate the implementation and create some efficiency so that we can move even faster."

The new combined unit will become Intel's Client Computing Group, lead by Kirk Skaugen, current head of Intel's PC Client Group. The division will include the teams which develop its Core processors for desktops and laptops, along with those that develop its Atom chips for smartphones and tablets.

Intel is putting bets on the continuous erosion of the distinctions between mobile device chips and PC processors. "More and more" processors will be needed in the future to power the likes of two-in-one models, Mulloy opined. By making these changes now, the new division will improve lines of communication between product teams and help it better reach manufacturers that use its products.

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