Jan. 8 (Bloomberg) -- Intel Corp. Chief Executive Officer Paul Otellini, spearheading the chipmaker's second attempt to crack the mobile-phone market, said this time the effort will pay off.

Otellini is relying on Intel's experience in ratcheting up the speed of processors to make future phones more like personal computers. In 2006, he decided to scrap predecessor Craig Barrett's $5 billion effort to sell chips that run the communications features of phones, after failing to wrest sales from Texas Instruments Inc. and Qualcomm Inc.

``What we are focused on now is where we think phones are going, not where they are today,'' Otellini said yesterday in a Bloomberg Radio interview at the Consumer Electronics Show in Las Vegas. ``In the past, we aimed at building yet another chipset for phones.''

Intel, the world's largest semiconductor maker, plans to release its package of mobile chips, called Menlow, in the first half. Facing slowing growth in PC sales, the Santa Clara, California-based company is once again turning to the market for mobile handsets, which outsell computers by more than 4-to-1.

``That's going to have huge potential,'' said Jim McGregor, an analyst for In-Stat, a research company in Scottsdale, Arizona. Still, ``they're not really going to have competitive products until 2009 or 2010.''

Intel shares have fallen 17 percent this year in Nasdaq Stock Market trading, after two analysts cut their earnings estimates on concern that technology spending growth will slow. The stock fell 62 cents to $22.26 at 4 p.m. New York time.

Bolstering Growth

Analysts estimate Intel's revenue growth will slow to 6.1 percent in 2009, according to a Bloomberg survey. That's down from an average of 13 percent from 2003 through 2006, when the company's Centrino product spurred laptop sales.

Barrett spent more than six years trying to get into the mobile-chip market. Otellini abandoned that strategy, selling a unit for $600 million that included a business purchased for $1.6 billion in 1999.

Otellini now is setting his sights on phones that can surf the Web and handle applications such as mobile video and music, applications that were once only available on desktop computers. To do that, phone chips will need to offer more processing power while consuming less electricity, he said.

``It's a lot easier to add communications to a small computer than add computing to a small phone,'' said Otellini, 57. ``It's a major element in our growth strategy,''

Phone Sales

Mobile-phone sales rose 15 percent to 289 million units in the third quarter, according to Gartner Inc. in Stamford, Connecticut. PC makers shipped 68.5 million machines, a 14 percent gain from a year earlier.

Products such as Apple Inc.'s $399 iPhone fired up the market for advanced phones last year. Apple sold more than a million iPhones in the three months ended Sept. 29, topping Chief Executive Officer Steve Jobs's forecast of 730,000.

Otellini, who took over the top job at Intel in 2005, demonstrated a so-called ultramobile computer yesterday during his speech at the Consumer Electronics Show in Las Vegas. The device translated Chinese road signs and showed video reviews of a restaurant as the user stood outside. It also translated directions given by a passerby.

Texas Instruments and Qualcomm dominate the market for mobile phone chips today. After trailing Dallas-based Texas Instruments in mobile-phone chip revenue in 2006, San Diego- based Qualcomm moved ahead in the first two quarters of last year, according to El Segundo, California-based iSuppli Corp.

Otellini joined Microsoft Corp. Chairman Bill Gates and Yahoo! Inc. CEO Jerry Yang as speakers at CES, the world's largest consumer technology conference. The show started in 1967, and products unveiled at CES in past years include the camcorder and the CD player.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net.

Last Updated: January 8, 2008 16:10 EST