Are we watching the end of an era? The latest round of shakeups at Intel (NASDAQ:INTC) might be the beginning of the end of Intel as we know it -- and when this Atlas shrugs, it sends shock waves throughout the entire technology world.

Talkin' 'bout a revolution
Intel just shook up its organizational structure in a big way.

  • Thirty-year Intel veteran and living industry legend Patrick Gelsinger is leaving his top position in the enterprise products group and moving to storage specialist EMC (NYSE:EMC), where he's instantly seen as a candidate for the CEO position. EMC likes to snag top talent from tech titans, like when it installed Paul Maritz as CEO for virtualization subsidiary VMware (NYSE:VMW). Maritz spent years at Intel before shooting to the top echelons of Microsoft (NASDAQ:MSFT).
  • In Gelsinger's wake, Intel is reforming into two divisions. The Intel architecture group (IAG) under Sean Maloney and Dadi Perlmutter contains all of Intel's former product divisions, from server and netbook processors to digital home products. And Andy Bryant -- current chief administrative officer and former CFO -- takes the reins of the newly formed technology and manufacturing group.
  • For good measure, general counsel Bruce Sewell is leaving to take the same position at Apple (NASDAQ:AAPL), reporting to Steve Jobs. Intel is left with an interim legal chief while searching for Sewell's replacement.
  • As a result of these changes, CEO and chairman Paul Otellini will get more time to ponder long-term business strategy, leaving day-to-day operations in the hands of his stable of capable lieutenants.

Before this internal revolution, Intel was organized into divisions that were delineated by different platforms such as mobility products, desktops, and enterprise products. The shift reflects a whole new way of thinking about the processor business. Manufacturing technologies have become almost as important as the processor designs themselves.

What the new divisions mean
And the new products-and-manufacturing separation can mean one of two things: Either Intel is setting itself up to pump unheard-of resources into Bryant's division, or else the manufacturing division is preparing to spin out and fly on its own. Recent side deals with Taiwan Semiconductor Manufacturing (NYSE:TSM) would point to the second option.

That's right: I think Intel is getting ready to follow in the footsteps of smaller rival Advanced Micro Devices (NYSE:AMD) once again. AMD split itself into a product company and a manufacturing operation earlier this year, and that newborn processor foundry seems to be gaining some traction. Maybe Intel is getting tired of the eternal race to the next smaller process node, and would prefer to just send its best designs to whichever manufacturer offers the best technology and pricing. That could be Intel's baby, Taiwan Semiconductor, or United Microelectronics -- I'd be shocked to see Intel sending business directly to AMD's manufacturing arm.

Smart move, Intel!
And that could very well be the ideal way forward. Processor technology is starting to run into some absolute limits of Moore's Law, and the economic benefits of shrinking transistors will become more dubious in coming generations of processors. The business advantages of staying at the bleeding edge may evaporate in the next few years, and then Intel will be better off as a pure-play chip designer. No wonder, then, if Otellini needs to spend more time thinking about how to reshape his entire business.

In the short term, none of this means much to investors. It will take time for the manufacturing focus to gain traction and move Intel's enormous needle. But it's a smart move for the long term as Intel gets ready to refocus on what Intel does best: designing processors. This re-org will pay off in the long run.

And I'd be remiss if I didn't mention what Intel's new direction means for AMD: not much. AMD has already completed the split I think Intel is preparing for, and the two rivals will compete on even footing when Moore's Law finally hits the wall.

Is fabless chip design the future of the processor industry? Give me your take in the comments below.