Layoffs loom, but there’s hope for Intel Israel employees, says expert

Israel is likely to feel some blowback from Intel’s Wednesday announcement that the company would lay off 12,000 workers, or about 11% of its workforce.

But on the hopeful side, the man reputed to be behind the restructuring, Venkata “Murthy” Renduchintala, has been to Israel and was “very impressed” with Intel’s operation here, according to Shlomo Gradman, chairman of the Israeli High Tech CEO Forum and one of the top Israeli experts on the chip and semiconductor industry.

“Most media reports have pointed to the slowdown in PC sales as the motivation for the reboot, but the story is more complicated than that,” said Gradman. “Of course, no one can make predictions, as the decisions are going to be made by the company, but it’s hard to imagine Intel shutting down too much in Israel, considering the benefits to the company.”

Based on a statement issued by the company announcing the layoffs – or rather, “restructuring” – Israelis might well think they have cause to worry. In the statement, Intel says that it seeks to “accelerate its evolution from a PC company to one that powers the cloud and billions of smart, connected computing devices. Intel will intensify its focus in high-growth areas where it is positioned for long-term leadership, customer value and growth, while making the company more efficient and profitable.”

Those “billions of smart connected devices” are likely mobile devices – smartphones, tablets, and the like – as well as Internet of Things devices. Israel is a world center for Intel’s processor development – with processors generally going into PCs and laptops, the exact devices Intel is “accelerating away” from. On the other hand, Skylake – the new processor developed largely at Intel Israel and the building block of the next generation of its range of devices – comes in various sizes, with iterations for laptops, tablets, mobile devices, and even for Internet of Things devices.

Indeed, the company, like so many others, is looking for IoT to greatly expand chip business, which is Intel’s core activity; 50 billion IoT devices will be coming online in the next decade, experts say, and the company that builds the slimmest, most powerful, and best-connected chips with the most capabilities and features is likely to dominate the industry. Intel sees Israel as a place for that advanced IoT chip development; last year, the company opened an IoT lab in Haifa.

“Although others may have gotten a head start, we believe Intel has the resources to dominate this burgeoning industry,” said Louise Summerton, who heads Intel’s IoT labs in Europe and the Middle East. “Haifa is our fifth IoT lab, and the areas we see the lab leading development in include smart cities/homes, agriculture, and transportation. “These are areas in which Israel has a strong tech presence, as it does in other related areas, such as security.”

Behind the Intel realignment is Renduchintala, an executive who was hired away from Qualcomm and brought in to help the company in its bid to redirect, said Gradman. “Several top level executives in charge of the PC and other divisions,” including Kirk Skaugen, Doug Davis, and Aicha Evans – have either already left the company or are planning to soon. “Those resignations preceded Wednesday’s announcement, which is a continuation of the shakeup at the company.”

One big plus for Intel Israel workers, believes Gradman, is the presence of another Qualcomm alum, Amir Faintuch – a close associate of “Murthy’s” when they were both at their former employer. Faintuch, himself Israeli – and presumably more aware of the past and potential future tech achievements of the start-up nation – is co-manager of Intel’s Platform Engineering Group, which designs the systems on a chip for the company’s next-generation IoT devices and mobile platforms. The relationship between the two may be a plus for the Israel operation, Gradman believes.

Venkata “Murthy” Renduchintala (Courtesy)

A memo by Renduchintala, apparently leaked and published in The Oregonian, has the new Intel president lambasting the company for a lack of focus, among other things. “Over the last three months I have conducted numerous project reviews with our execution teams, and there is a clear trend that has emerged in these reviews – a lack of product/customer focus in execution that is creating schedule and competitiveness gaps in our products.”

Intel Israel is the country’s largest single employer in the tech sphere, with over 10,000 employees and tens of thousands more in companies that supply it with products and services. The company won’t say who or which divisions or locations will be affected by the layoffs.

“No, we are not making changes indiscriminately,” the company said. “In fact, we will increase our investments in the areas of highest growth and return. We plan to increase investments in its data center, IoT, memory and connectivity businesses, as well as growing client segments such as 2-in-1s, gaming and home gateways. We are not providing site-specific information at this time, and we are still evaluating our plans for Europe (Israel).”

Speaking to The Times of Israel, an Intel Israel spokesperson expressed hope that Gradman’s assessment was accurate but would not comment on the speculation regarding Renduchintala’s role in the shakeup. “The final decisions on these matters will be made by Intel CEO Brian Krzanich,” the spokesperson said.