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Intel comm-chip business up for sale

Posted: 06 Jun 2006     Print Version  Bookmark and Share

Keywords:communications chip  network processor  Xscale  Intel  Mark LaPedus 

Troubled Intel Corp. has put several of its loss-ridden communications-chip businesses on the block, including its network processors, XScale chip lines and other products, according to a report from the San Jose Mercury News on Saturday (June 3).

Intel spent more than Rs.45,110 crore ($10 billion) to enter the communications business over the years, but the microprocessor giant lost its shirt—if not millions of dollars in the arena. The reported communications-chip sale is said to be part of Intel's plan to overhaul the company. Intel is also set to include the layoff or redeployment of 16,000 employees.

According to the report, Intel has put the following product lines up for sale:

  • Intel's IXP network processor and communications processor lines are on the block, the report said. Those lines made about Rs.676.65 crore ($150 million) in revenue for 2005, according to the report.

  • Intel's Xscale processor business, including the StrongARM chip for PDAs, BlackBerrys, cellphones, handheld computers and portable media players, is up for sale, it said. This business made approximately Rs.1127.75 crore ($250 million) in sales last year, according to the report.

Other lines are also on the block as well. Starting in the late-1990s, Intel moved into the communications market in a major way, but the chip giant was hit hard by the downturn in the segment several years ago.

It never fully recovered from the downturn. The chip giant also never really understood the complex nature of the communications business and its proprietary standards and lack of part commoditization in the marketplace. It also failed to dislodge its smaller but more nimble competitors in the sector, such as Broadcom, Marvell, STMicro, Texas Instruments and others.

For some time, Intel has been shedding many of its ill-fated communications efforts. In 2003, for example, Intel sold most of the assets of its Trillium Digital Systems Inc. subsidiary to Continuous Computing Corp. Intel paid Rs.1,353.30 crore ($300 million) for Trillium in August 2000.

Most recently, struggling Intel will halt future development of optical physical-layer products developed by Giga A/S, a Copenhagen company Intel acquired in 2000 for Rs.5,638.75 crore ($1.25 billion).

With little or no fanfare, Intel is moving out of the embedded chip space. And there is speculation that Intel will exit or spin-off its NOR flash unit, which is also losing a ton of money.

Still to be seen, however, is what Intel will do with it bread-and-butter microprocessor business, which is losing share to rival Advanced Micro Devices Inc. One of the products in danger at Intel could be the 64bit Itanium processor line, a chip that was late to market and has generated lackluster demand.

- Mark LaPedus
EE Times

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