In a fleeting attempt to rival Qualcomm in the wearable space, Intel acquired multiple booming hardware startups and merged them to form the New Devices Group back in 2014. The aim of setting up this exclusive group was to aggressively focus on the development of it’s wearable chips and the hardware to fix the same within. But, these plans didn’t bear any fruit and the American chipmaker seems to be a big step in the backward direction, reports TechCruch.

Citing sources privy to the developments, the publication mentions that Intel is planning to scale back its wearable efforts or completely exit from the same in the coming months. The impact of this decision, you ask. Well, this will obviously lead to large scale workforce reductions in the New Devices Group (NDG). The effect of the same is also expected to creep into the larger New Technologies Group (NTG) into which the NDG was merged last year.

The reports of these lay-offs come on the heels of the recent announcement of the company’s detailed plans for integrating AI technology into its chips. It launched a comprehensive AI development portfolio called Intel Nervana platform and announced that it is working on integrating the machine learning technology from its acquisition of Nervana Systems into their processors, debuting in mid-2017.

Coming bakc to wearable, Intel decided to step foot in the promising wearable ecosystem with the acquisition of fitness watchmaker Basis back in 2014. This was followed by the purchase of Canadian digital eyewear maker Recon in 2015, its partnership with Luxottica and the report of the company working on the development of the next iteration of Google Glass. The chipmaker had then established that it was also completely focused on dominating the wearable market with its new products.

But the company suffered a major setback when its first official wearable ‘Basis Peak’ started to show signs of overheating. Intel instantly recalled all of its smartwatches. But instead of investigating the issue, fixing and replacing it, the company decided to completely nix the device. It was off the market in no time and the software support for the same was shut down by year’s end. The company was planning to launch another smartwatch but it might never see the light of day.

There is, however, no word on the smart eyewear division which may still survive this huge setback. Intel could use the acquired tech to develop its own VR and AR headsets. At a conference earlier this year, the company has already shown off a prototype for its wireless standalone virtual reality headgear called ‘Project Alloy’.

The sources further claim that Intel has already intimated the company personnel who’re expected to lose their job by the end of this year. While there is still uncertainity surrounding the fate of the New Devices Group, it is highly probable that the company will shutter its wearable division.

[UPDATE / 1:30 p.m] : In a statement sent to The Tech Portal, an Intel spokesperson mentions that the company isn’t shuttering the wearables division. Though the spokesperson doesn’t comment on the layoffs, he states that the company also had a few products in the pipeline (excited much!?)

Here’s the full statement:

Intel is in no way stepping back from the wearables business. In fact, we have several products in the works that we are very excited about, as well as prior launches that highlight our wearable technology such as the TAG Heuer Connected watch and recent Oakley Radar Pace smart eyewear.

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