December 9, 2010

Intel To Offer Tablet, Smartphone Chips In 2011

Intel Corp. said it is going to launch chips designed for tablet computers and smartphones late next year, attempting to establish its foot in the fast-growing market.

The company said that the new chips will invigorate its mobile business, which has struggled to gain momentum amid sales of Apple's iPad tablets and smartphones using Google's Android operating system.

"The consumer (tablet) products will roll out over the first half of next year," Chief Executive Paul Otellini told analysts at a conference.

Otellini said manufacturers have agreed to use Intel chips in 35 tablet computers, including a few that are already available on the market.

Intel's Atom chips dominate notebooks, but smartphone and tablet manufacturers have rejected them in favor of more power-efficient chips based on ARM architecture.

Investors have been waiting to see what tablet manufacturers do when Intel starts to offer chips for high-profile consumer tablets.

"Intel is moving in the right strategic direction but they still have a long way to go," Hendi Susanto, an analyst at Gabelli & Company, told Reuters. "They're late into the game. There is no clear visibility on what the products look like."

According to market research firm Gartner, Intel's share of the world semiconductor market slipped from 14.2 percent in 2009 to 13.8 percent in 2010.

Otellini said Intel's pursuit of the smartphone market was "a marathon, not a sprint," adding that the company's second-generation Medfield chip is now being tested by customers and should ship next year.

"You will see smartphones from premier branded vendors in the second half of 2011 with Intel silicon inside them," Otellini told analysts.

He also said that Intel has resumed share repurchases after stopping over a year ago because of the recession.

"I'm happy to report that Intel has been back in the market this quarter," Otellini said. "The buyback has resumed."

Intel said in November that it was boosting its quarterly dividend by 15 percent, a move seen as a sign of confidence that the world's largest chipmaker is growing.

Craig Ellis, an analyst at Caris and Company told Reuters that a resumption of Intel's share repurchases amplifies that signal. 

"Shareholders will look at that and say management is putting their money where their mouth is," he said.

Intel has started to ship its new Sandy Bridge chips, which are expected to be in notebooks on store shelves in early 2011.

The Sandy Bridge microchips include graphics processing capability that the company says is equivalent to low-end discrete graphics processors.


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