Intel to combine PC unit with struggling mobile chip division

The reorganization comes as the lines dividing consumer electronics devices blur, the chip giant says.

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Intel CEO Brian Krzanich sees lines between mobile devices blurring. Intel

Intel plans to combine its PC and mobile chip groups into one division as the company struggles to expand its chip sales for mobile devices.

The reorganization, which was announced Monday in an email sent to employees by CEO Brian Krzanich, will be implemented early next year, Intel spokesman Chuck Mulloy said.

"The market continues to evolve rapidly, and we must change even faster to stay ahead," Krzanich said in the email, which was first reported by the Wall Street Journal.

Kirk Skaugen, a senior vice president who now oversees Intel's PC Client Group, will lead the newly formed Client Computing Group, Mulloy said. The new division will also include sales of processors and modem chip used in mobile devices, which were previously part of the Mobile and Communications Group.

The mobile group was created in a 2011 reorganization that combined four existing divisions: mobile communications, Netbook and tablet, mobile wireless, and ultra mobility. Mobile group chief Hermann Eul, who joined Intel as part of the chip giant's acquisition of Infineon in 2011, will supervise the transition, which is expected to be completed in the first quarter of 2015, Mulloy said.

Intended to improve internal communications and efficiency, the structural changes come as the lines separating consumer devices blur, Mulloy said.

"We are seeing a blending of the lines between various devices," Mulloy said in an interview. "The idea is to accelerate our efforts for tablets and create greater efficiency."

Intel dominates PCs and server systems but has struggled when it comes to mobile devices. The Santa Clara, Calif.-based company has spent billions of dollars trying to expand its chip sales for mobile devices amid fierce competition from rivals including Qualcomm.

So far, Intel has managed to get its mobile processors or modems into just a handful of notable products, including the Samsung Galaxy Alpha smartphone in Europe and Asia, as well as the Samsung Galaxy Tab S tablet in the US.

Last month, the company reported a better than expected third-quarter profit as PC and server-system sales made up for dismal results in its mobile unit. The division recorded an operating loss of $1 billion during the quarter, compared with a loss of $810 million a year earlier. Revenue shrank to just $1 million, from $353 million a year earlier, as it appears subsidies Intel pays to manufacturers to win new mobile business drained nearly all the mobile unit's revenue for the quarter.

The company has been working to get into tablet computers by offering subsidies to manufacturers, hurting its profit in the process, but Intel has kept pace with its goal of putting its mobile chips in 40 million tablets by year's end.