According to an internal Intel email seen by the WSJ, the chip giant is making some major changes to breathe new life into its struggling mobile operations. Intel is merging its loss-making Mobile and Communications group into the cash-cow PC Client group. The move is expected to take effect early next year.

While Intel hasn’t formally announced this move, the WSJ spoke to an Intel communications person, who apparently confirmed the changes, saying “that will happen and more”. The new, merged unit will be called the Client Computing group and represents realignment along consumer/enterprise lines, not unlike what’s also underway at Microsoft.

Just as Microsoft feels existentially threatened by the move away from traditional PCs to tablets and smartphones as people’s primary IT devices, so Intel has been mainly a spectator as ARM-based SoCs have powered most of them. Intel did once have an ARM-based product set, but sold it to Marvell and has been focused on x86-based mobile chips since.

Intel has consistently raised the bar in terms of processing power, but efficiency trumps power in mobile and in that respect ARM has the advantage. Intel scored a low-power win with the Atom chip, but has struggled to convince device vendors to defect from ARM since then. The current Atom roadmap features distinct smartphone and tablet forks, with the latest versions codenamed Merrifield and Mooresfield, respectively.

Intriguingly Intel’s lapsed partnership with Nokia has also been resurrected in the form of a new tablet launch, which is the first to bear the Nokia brand, licenced out by the Nokia Technologies tech IP business. The Nokia N1 tablet is apparently manufactured by Foxconn, which is paying Nokia to use its brand. It features a Mooresfield chip, a Nokia UI over Android and will be available in China in the first quarter of next year.

The ‘Nokia’ N1 Tablet

“We are pleased to bring the Nokia brand back into consumers’ hands with the N1 Android tablet, and to help make sophisticated technologies simple,” said Sebastian Nyström, Head of Products at Nokia Technologies. “The N1 has a delightfully intuitive interface and an industrial design to match it. This is a great product for Nokia fans and everyone who has not found the right Android tablet yet.”

Tablets are likely to be Intel’s best hope in mobile as they have larger batteries and require more processing grunt to power their larger screens. In smartphones Apple makes its own chips and Qualcomm owns the higher end of the market, where has its best shot. To succeed there Intel must persuade vendors to switch from Qualcomm and even parity is unlikely to be enough.

Intel’s mobile division currently loses around a billion dollars a quarter, which is not small change. This merger will hide that loss in the quarterly statements, but it’s not obvious what value the PC division can add when it comes to competing in mobile. Maybe this is a sign that Intel has effectively given up on smartphones and is prioritising tablets.

Intel’S Mobile Division Is Losing A Billion Dollars A Quarter