Intel to Combine PC, Mobile Chip Groups

By Don Clark 

Intel Corp. plans to combine operations that handle chips for personal computers with those targeting smartphones and tablets, according to an email sent to employees by Chief Executive Brian Krzanich.

The reorganization comes as Intel, a longtime powerhouse in chips used in PCs and server systems, faces pressure to step up its penetration in mobile devices.

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

Intel's changes, which are scheduled to take effect in early 2015, will broaden the responsibilities of Kirk Skaugen, a senior vice president who now oversees what Intel calls the PC-client group. Under the new structure, Mr. Skaugen will head a new unit called the client-computing group, which will also oversee sales of processors and modem chips used in mobile devices.

Those mobile-chip operations are part of a group known as the mobile and communications group. Its general manager is Herman Eul, a vice president who joined Intel as part of its 2011 purchase of the wireless operations of Infineon Technologies AG.

Mr. Krzanich wrote that he had asked Mr. Eul to focus on leading the transition to the new structure until at least the end of the first quarter of 2015, at which time his next position with Intel will be announced.

The mobile and communications group posted a $1 billion operating loss in the third quarter, while revenues shrank to just $1 million from $353 million in the year-earlier period. Intel traced those results largely to a push to get the company's chips in 40 million tablets in 2014, which requires the company to pay special subsidies to customers.

Mr. Skaugen's PC-client group, by contrast, reported operating profit of $4.12 billion with revenue that grew 9% to $9.19 billion.

In marketing chips for smartphones and tablets, Intel has lagged behind rivals that use technology from ARM Holdings PLC. The company has argued that the distinction between some categories will fade with the rise of new two-in-one models that can operate in tablet or clamshell mode.

"That will happen more and more," said Chuck Mulloy, an Intel spokesmen, who confirmed the organizational changes.

While Mr. Skaugen will oversee processors aimed at tablets and smartphones, operations in the mobile and communications group that developed wireless modem chips will shift to a wireless platform research and development organization, according to the email.

Write to Don Clark at [e-mail]

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