Intel to combine networking chip groups

Intel plans to combine two product groups in a reorganization of its communications chip business.

Effective Jan. 1, the Intel Communications Group, which offers networking chips, will absorb the company's Wireless Communications and Computing Group, which creates chips for wireless networks and cellular phones, Intel said Wednesday.

Sean Maloney, the executive who runs Intel's existing Communications Group, will serve as general manager of the newly consolidated unit. Ron Smith, general manager of Intel's wireless communications and computing group, will retire early next year, Intel said.

The shift comes after Intel announced last week that it will take a $600 million charge against fourth-quarter earnings, due to impairment of goodwill for its wireless business.

While Intel did not spell out any financial goals related to the combination of the two product groups, the communications and wireless businesses have not reported an operating profit since 2000, the company's annual report for 2002 shows. During the first nine months of 2003, the two groups have recorded a combined operating loss of $718 million, according to Intel's third-quarter earnings statement.

Intel also has suffered from a decision it made last January to raise its flash memory prices by as much as 40 percent. During the third quarter, the company slipped to fourth in revenue among flash providers, market research firm iSuppli said.

Intel declined to comment on charges for the consolidation. No layoffs are planned, said company spokesman Dan Francisco.

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"We continue to drive the convergence of computing and communications through our product lineup, and with this we see wireless local-area networking and wide-area cellular technologies coming together," Craig Barrett, Intel's CEO, said in a statement.

"Consolidation gives us better product planning and customer focus in these strategically critical areas going forward," Barrett said.

The new Intel Communications Group will take on the wireless group's products, which also include the XScale processor, Intel's flash memory business and its digital signal processor products, the company said.