[WSJ] Intel To Combine Mobile, PC Chip Groups

[Arachnotronic]

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.

http://online.wsj.com/articles/inte...0066754989568544183504580283431507685528.html

I can't imagine that this bodes well for Intel's mobile product pipeline.

 

[mrmt]

http://online.wsj.com/articles/inte...0066754989568544183504580283431507685528.html

I can't imagine that this bodes well for Intel's mobile product pipeline.

Why not?

 

[Arachnotronic]

Why not?

If things were going so well under Eul, why are they implementing this management change?

Skaugen has a very good track record; he successfully ran the data center group within Intel and is doing a good job with the PC Client Group. I think he'll do a good job running this combined group, but I'd be willing to bet that there's a lot of "cleanup" that needs to be done.

 

[Roland00Address]

So is this done to keep wall street happy? Or to combine talented management under one umbrella especially since the cpu cores themselves are the same, it is the everything else of the SOC that is different.

 

[Arachnotronic]

So is this done to keep wall street happy? Or to combine talented management under one umbrella especially since the cpu cores themselves are the same, it is the everything else of the SOC that is different.

The SoCs and related blocks will all be done under this new group. Cellular radios, wireless connectivity, and the like will all fall under a separate group. I wouldn't be surprised if Aicha Evans ends up leading the wireless group.

 

[Enigmoid]

Two things I can think of.

1) Intel wants to avoid the bad press their losses in mobile are bring them.
2) Product fusion as Mobile and PC Client use much of the same stuff.

 

[Burpo]

http://www.nasdaq.com/article/intel-to-combine-pc-mobile-chip-groups-20141117-01217

 

[Idontcare]

http://www.nasdaq.com/article/intel-to-combine-pc-mobile-chip-groups-20141117-01217

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.

Yeah, that doesn't sound overly confidence building for Mr. Eul's career path. Reads like he has been identified as being part of the problem, not part of the solution.

 

[videogames101]

my gut reaction is that having a group losing 2 billion like clockwork wasn't going over too well

 

[ClockHound]

my gut reaction is that having a group losing 2 billion like clockwork wasn't going over too well

They're not losing 2 billion, they're inverted earning 2 billion.

However, they'd be happier to be inverted losing it.

 

[VirtualLarry]

1) Intel wants to avoid the bad press their losses in mobile are bring them..

I think that this may be the reason. What company wants to hear in the press that they are losing $2Bil in the mobile market, and also draw attention to their "Contra Revenue" program.

 

[Burpo]

Broadening their market and they'll throw billions at it until it happens..

Intel CEO sees China chip partners moving away from rival technology
http://www.reuters.com/article/2014/11/11/us-intel-china-idUSKCN0IV1YZ20141111

"Intel this year signed deals with Rockchip and Spreadtrum Communications to use Intel's technology to make chips for low-cost smartphones and tablets aimed at China's fast-growing consumer market."

"With demand for smartphones cooling in the United States, manufacturers have increased their focus on China, where demand is strong for handsets priced under $150. Krzanich said Intel might partner with more companies there.

"We're not done. China is the fastest growing market in the world," he said."

Been in the works for awhile now..
http://www.bloomberg.com/news/2010-...wireless-radio-chip-unit-for-1-4-billion.html

"Intel Corp., the largest chipmaker, agreed to buy the wireless operations of Infineon Technologies AG for about $1.4 billion, gaining a foothold in the mobile- phone business it has struggled to crack for more than a decade"

This is Intel.. They don't care about bad press or paying dividends.. They're even buying their own stocks back.. Almost like they know what they're doing..

 

[NTMBK]

Hmm. Hope this doesn't mean that Intel is giving up on integrated LTE modems, but I can't help suspecting that when they're splitting up teams between different divisions. Given their problems in delivering phone SoCs already, this can surely only make things more difficult for them.

Still, makes sense for other reasons. Having "2-in-1s for Windows" and "tablets for Android" falling under different divisions when they both use the same platform seemed a little bizarre.

 

[witeken]

http://online.wsj.com/articles/inte...0066754989568544183504580283431507685528.html

I can't imagine that this bodes well for Intel's mobile product pipeline.

But I can.

Imagine this:

Brian Krzanich: "Folks, I just got this insane idea that makes no sense at all and will cost us a ton of money. But we're going to do it anyway."

Makes perfect sense. A lot of concerns here in this topic for nothing.

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

 

[liahos1]

But I can.

Imagine this:

Brian Krzanich: "Folks, I just got this insane idea that makes no sense at all and will cost us a ton of money. But we're going to do it anyway."

Makes perfect sense. A lot of concerns here in this topic for nothing.

i think this could be a positive. I mean what has hermann eul really done. the writing was on the wall for his exit awhile back I think. The fact they are getting the atom and core guys in the same division while separating the baseband for aichia (presumably) seems to make sense. looking forward to their investor day.

 

[positivedoppler]

I bet layoffs are coming......
Prob from the atom group

 

[NTMBK]

I bet layoffs are coming......
Prob from the atom group

I doubt they'll go for layoffs- better to just reassign the engineers to different projects and keep them within the company.

 

[Nothingness]

I doubt they'll go for layoffs- better to just reassign the engineers to different projects and keep them within the company.

The problem is that sometimes Intel close design centers but the news never seem to filter out at least not officially. For instance the Intel Barcelona R&D center which was working on parts of 10nm Xeon Phi was closed a few months ago. Some very good engineers decided not to go the US and moved into companies with European R&D centers.

 

[Ajay]

I'm guessing that the TAM for x86 ultra-mobile (tablets & phones) is shrinking quickly as a function of market dynamics. There aren't not many successful high end tablets (Apple & Samsung). It seems to be a race to the bottom for the rest of the tablet market (Intel has SoFIA - but that's going to be a lower margin business). I think the same thing is happening in phones. Intel may well have missed the required TTM and killed their TAM in doing so.

The market (OEMs) may be looking past Intel right now - so Intel will need to hunker down now and wait for another opening.

 

[VirtualLarry]

I'm guessing that the TAM for x86 ultra-mobile (tablets & phones) is shrinking quickly as a function of market dynamics. There aren't not many successful high end tablets (Apple & Samsung). It seems to be a race to the bottom for the rest of the tablet market (Intel has SoFIA - but that's going to be a lower margin business). I think the same thing is happening in phones. Intel may well have missed the required TTM and killed their TAM in doing so.

The market (OEMs) may be looking past Intel right now - so Intel will need to hunker down now and wait for another opening.

Like the $99 HP Stream 7 x86 / Atom quad-core 1.33Ghz tablet? Surely, Intel must be subsidizing some of that BOM.

As far as component count (which likely corresponds to cost), my unscientific analysis is that my Stream 7 is heavier than my Digiland 7" Android tablet. Thus more components, thus more cost. (Well, list is twice that of the Android tablet.) Both are quad-cores.

 

[oobydoobydoo]

What will intel call their new chips? Atomic Core i9??I would buy

 

[Ajay]

Like the $99 HP Stream 7 x86 / Atom quad-core 1.33Ghz tablet? Surely, Intel must be subsidizing some of that BOM.

As far as component count (which likely corresponds to cost), my unscientific analysis is that my Stream 7 is heavier than my Digiland 7" Android tablet. Thus more components, thus more cost. (Well, list is twice that of the Android tablet.) Both are quad-cores.

Well, yeah - selling an x86 Atom into a $99 tablet just can't be making Intel any money - forget about the 60%+ margins that Intel prefers. Intel's offerings still have higher BOM costs and, effectively, have more CPU performance than is necessary even for tablets. There is just no openiing for Intel with a premium SoC where the two top premium product companies are tied, at least for the next 5+ years, to ARM. Intel is stuck, ATM, trying to move against, what appears to be, massive momentum. Players who were hoping x86 was going to create the kind of disruption that would favor them are left with no disruption and hence no advantage.

Samsung and Apple have effectively tied mobile phone users into forced obsolescence upgrade cycles, but it's not based so much on performance as was the case with PCs.

I really thought Intel had a good shot at this, but the essential failure of BT seems to have put Intel into a corner. Intel may do well in the long term: EUV + 450mm wafers + low BOM costs could lead to competitively priced SoCs and open a window of opportunity for Intel. IMHO.

 

[dealcorn]

I read the announcement a little differently. Best case this announcement impacts products released 2016 and later. It should have no effect on 2015 products. Since its 2007 birth, Tick Tock has been an effective development strategy with major risk mitigation benefits. However, Tick Tock only works as a strategy to enhance an existing product (incremental development). Prior to 2015, Atom was too incompetent as a mobile chip to benefit from Tick Tock: Atom lacked key functionality and insightful design specifications. However, by 2016 mobile Atom should have a non trivial market share in both tablets and smart phones. Designs should be better specified with substantively complete SoC's. While contra revenue will be gone, the level of mobile technology leadership spending likely will not change. Whether the the mobile gross margin will fully offset losses caused by leadership spending is and open question. However, Atom should be in sufficiently good shape to benefit from Tick Tock. This is a big step forward.

 

[witeken]

the essential failure of BT

Intel 2014 tablet goal: 40M

Q1: 5M
Q2: 10M
Q3: 15M
Q4: 20M (projected)
-----------------------
'14: 50M

That is a 5X tablet unit growth in 1 year and isn't even counting the non-tablet Bay Trail market.

I bet they will double again in 2015.

 

[witeken]

This comment from AnandTech shows that it isn't just to blur the division's losses:

While this may seem at first glance as a way to move the losses into a profitable division, Intel has not yet decided whether the new divisions will be reflected in their financial reporting structure. So clearly this is not just about the numbers.