Intel CFO Says Chipmaker Needs Mobile Product Wins

Intel Corp. (INTC), whose processors run more than 80 percent of the world’s personal computers, said the decline in the traditional PC market will persist as consumers shift to tablets and other mobile devices.

“What you’re seeing is a transition of the classic PC market into these kinds of things,” Chief Financial Officer Stacy Smith said in an interview on Bloomberg TV. “If you think about the PC as being a classic computer that you might have used two or three years ago, I think that device declines.”

The chipmaker, based in Santa Clara, California, now has chips that are designed to power tablets, smartphones, laptops that convert into tablets, and thin notebook computers, giving it a chance to make up for slumping PC sales and regain ground it has lost to competitors in those new markets, Smith said.

Intel executives who had said tablets were “consumption devices” that would be bought in addition to PCs -- not as replacements to traditional desktops and laptops -- are now saying the company’s growth depends on low-power chips for portable devices.

Global PC shipments fell 10.9 percent in the second quarter to 76 million, the fifth consecutive quarterly drop, market researcher Gartner Inc. said earlier this month. Sales slid from a year earlier in all regions, including a 1.4 percent drop in the U.S.

Near Zero

Intel’s PC-chip group, its largest division, had second-quarter sales of $8.1 billion, down 7.5 percent from a year earlier. The company was unable to compensate for that drop with an increase of less than 1 percent in server-chip sales, to $2.74 billion.

The chipmaker’s market share in smartphones is “close to zero today,” and “you would measure our share in tablets as being some low number,” Smith said.

The company is aiming to change that by gearing its manufacturing more to producing chips that don’t quickly drain batteries, he said.

“We’re targeting those designs and really focused on that with the full might of the company and the full power of our manufacturing engine,” he said. “Intel doesn’t enter into markets to have small amounts of share.”

The stock fell less than 1 percent to $23.24 at the close in New York. It has gained 13 percent this year, compared with a 22 percent advance in the Philadelphia Semiconductor Index.

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

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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