Intel to Merge Loss-Making Mobile Business With PC Division

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Intel CEO Brian Krzanich
Brian Krzanich, Chief Executive Officer of Intel Corp. Photographer: David Paul Morris/Bloomberg

Intel Corp., struggling to gain a foothold in mobile computing, is merging its mobile phone and tablet businesses with the division that makes chips for personal computers.

The reorganization of the two units, which have been running at a loss, announced internally, will be completed early next year, Chuck Mulloy, a spokesman for the Santa Clara, California-based chipmaker, said yesterday.

“The lines are blurring between PCs, tablets, phablets and phones,” Mulloy said. “The idea is to accelerate the implementation and create some efficiency so that we can move even faster.”

The new combined unit will be led by Kirk Skaugen, who currently heads the PC-chips business. Hermann Eul, currently in charge of phone and tablet chips, will stay on to help the transition and until a new post for him is announced in the first quarter of 2015, Chief Executive Officer Brian Krzanich told employees in a memo, Mulloy said.

Intel has struggled, even after more than a decade of development efforts and billions of dollars in spending, to make headway in the fast-growing market for phone and tablet chips. Intel hasn’t yet decided whether the new arrangement will be reflected in its earnings reporting structure, according to Mulloy.

While Intel is on track to exceed its target of shipping 40 million tablet processors this year, much of that is fueled by chipmaker subsidies to device makers. Those payments resulted in an operating loss for the mobile unit of $1.04 billion in the third quarter, following a similar loss in the previous period.

Revenue in the mobile and communications group declined to $1 million in the third quarter, from $353 million a year earlier.

Intel’s organization change was earlier reported by the Wall Street Journal.

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