Intel may carve off communication group, say analysts

Intel has tried to become a big name in communications chips for years, but it may soon try to hand it off, chip analysts speculated earlier this week.

The money-losing comms group and the flash memory group may be spun out of Intel as the company reorganizes for the future, said a trio of analysts--Mark Edelstone, Joe Osha and Dan Niles--speaking at a Churchill Club event on Monday. (Ashlee Vance of The Register attended the event and reported on it.)

It's not like Intel hasn't tried. Between January 1999 and 2002, Intel spent about $11 billion dollars acquiring 35 companies. It took a break and then started again.

The company has had a few victories. It is one of the largest makers of WiFi chips, thanks to the Centrino bundle, but it has not become a major threat to Texas Instruments in cell phones despite a couple of strong design wins. Intel's communications group regularly lost millions per quarter for an extended period, but the financials perked up when the group was merged with the flash memory unit.

Some doubted the strategy from the beginning.

"Becoming the world's leader in processors for the PC was part of their destiny," said Steve Tobak, in 1999, who was then vice president of marketing at rival National Semiconductor. "This is different. There is the question whether their heart is truly in itÂ…Networking is not in their blood."

Intel did not comment on the analysts' comments and typically doesn't. The company is currently undergoing a review of its business and structure. In the past, Intel has jettisoned weak divisions in times of trouble. Still, some comm chips are doing well, so who knows exactly how this will play out.

Some other analysts have already predicted the flash memory group may be spun out as a separate organization. Intel has made NOR flash for years and last year formed a NAND flash group with Micron.

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