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Intel merging mobile and PC groups as line between phone and computer blurs

Posted: July 18, 2014, by: Faisal Siddique

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Chip-making giant Intel is set to merge its mobile and tablet division together with the part of the company that makes processors for personal computers. The company’s chief executive, Brian Krzanich, announced the plan — which will combine the loss-making mobile group with the profitable PC chip-making group early next year — in an email to employees. Intel spokesperson Chuck Mulloy said the move comes as the “lines are blurring between PCs, tablets, phablets and phones,” and explained that the company’s aim is to “accelerate the implementation and create some efficiency so that we can move even faster.”

The company said in April this year that its mobile division had a “roadmap to profitability,” but apparently decided to try a different approach after the group lost billions of dollars over the last few years. Intel’s mobile division recorded a $1.04 billion loss in 2014’s third quarter, and revenues declined from $353 million in the third quarter of 2013 to just $1 million this year. In contrast, Intel’s PC chip-making division has posted an operating profit of $4.12 billion, and increased its revenue nine percent to $9.19 billion.

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A powerful push by the company to get its processors into mobile devices has ensured that it’s still on track to beat its target of 40 million tablet chips shipped this year, but has also left it paying heavy subsidies to manufacturers. Intel has lagged behind its rivals in producing chips for the mobile market, with the company particularly slow in adopting LTE connectivity. Intel planned to introduce integrated LTE capabilities in its chips by late 2015 at the earliest, while Qualcomm’s ARM chips can already connect out of the box, helping it become dominant in the sector.

Krzanich had previously said that he saw cheap tablets as the way forward for Intel, at the expense of traditional PC sales, but by merging the two divisions Intel is betting that the distinctions between mobile device chips and PC processors will continue to erode. Mulloy says that “more and more” processors will be needed in the future that can be utilized in tablets, smartphones, or laptops, and that by merging the two divisions, Intel will be better placed to produce them.

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