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Intel forms wireless group

With competition heating up in the PC processor world--and wireless all the rage on Wall Street--the chip giant forms a group dedicated to that market.

With competition heating up in the PC processor world--and wireless all the rage on Wall Street--Intel today announced the formation of a group dedicated to wireless and cellular communications.

The new group will manufacture and design flash memory, used extensively in cell phones; the StrongArm microprocessor; "embedded" microcontrollers and digital signal processors. Vice president and general manager Ron Smith will be charged with developing products for cell phones and related services, according to a company spokesman.

Wireless and cellular communications has emerged as one of technology's growth areas this year, a trend underscored by the recent multimillion-dollar deal between Microsoft and Ericsson and a market boom that has made wireless phone firm Nokia Europe's largest company in terms of market capitalization. In the not-so-distant future, there will be more than 1 billion cell phone users worldwide, experts predict, and many of those will rely their mobile device to access the Internet, corporate databases and email accounts.

As for the Santa Clara, Calif., chipmaking giant, Intel's push to diversify beyond its traditional base of PC and server microprocessors is motivated largely by a growing sense that the revenue stream from computer sales has slowed, according to analysts. The PC market will continue to grow, but pricing pressure--especially in the markets for server and PC chips--will likely prevent Intel from maintaining its historical revenue and profit curve.

Intel has manufactured flash memory chips and other semiconductors for communications devices for years, but re-organizing these groups in a separate division--called the Wireless Communications and Computing Group--will help the company better concentrate on wireless technology, a company spokesman said. For instance, the group will operate under its own profit and loss statements for internal (although not necessarily external) purposes.

One of the centerpieces of the new group will be DSP Communications, a DSP designer that Intel bought for $1.6 billion in October. DSPs translate human voice patterns into digital signals and back again, and are a crucial element of cell phone technology.

DSP Communications will operate as a separate subsidiary of Intel, similar to the way Level One operates.

Still, although the market for communication processors is booming, Intel executives have acknowledged that the companies Intel has acquired typically operate with lower gross margins.

As to Smith, the executive formerly ran the Computing Enhancement Group and oversaw a number of the product lines that will go into the new division. Smith also oversaw chipsets, which are PC components, and graphics chips, an effort that Intel has scaled back considerably.

In other organizational changes, Intel said that chief financial officer Andy Bryant would begin to oversee the company's e-commerce operations. Intel last year launched into an effort to transfer the lion's share of its transactions with computer makers and other customers online.