Intel to mask billion-dollar mobile losses with new financial reporting structure
With its troubled mobile chip unit hemorrhaging cash — thanks in part to Apple's domination of the smartphone and tablet markets — Intel this week announced that it would no longer report mobile earnings as a separate line item, instead choosing to lump them in with its money-minting PC business.
Intel's Mobile and Communications Group will be financially merged with the PC Client Group under the banner of a new Client Computing group, which will encompass "platforms designed for the notebook, 2 in 1 systems, the desktop, tablets, and smartphones; mobile communication components; as well as wireless and wired connectivity products."
The chip giant's mobile division has lost more than $7 billion since 2012, while the PC business has pulled in over $27 billion in the same span.
Word of the move — which will have the effect of hiding Intel's staggering mobile losses behind the PC group's strong sales — first surfaced late last year, but was not officially confirmed until now. The new structure will take effect beginning with Intel's Q1 2015 earnings, which are due next week.
Still a force to be reckoned with in data centers and on the desktop, Intel was nevertheless late to the mobile party and has found itself outclassed by ARM-based chips. Apple and Samsung, which together account for the majority of smartphones and tablets sold each year, each depend largely upon their own in-house silicon.
Intel is believed to have scored a small win by securing a contract to supply baseband chips for the so-called "iPhone 7," but that would be more of a moral victory than a financial one.
Apple's A-series chips have become so performant that many industry watchers expect to the company to eventually release an A-powered MacBook, which could bite into Intel's finances even more deeply. Such a shift is already underway in the enterprise, with many companies exploring and deploying ARM-based servers to lower capital expenses and conserve energy.
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