Intel Says Mobile Investment Needed to Ensure Future

Intel (INTC) Corp. said it needs to keep investing in its money-losing mobile-chip business to ensure its future in an electronics industry where everything will be connected to the Internet.

The world’s largest computer-chip maker disclosed in April that losses exceeded revenue in its mobile division. After a slow start, Intel’s mobile-chip capabilities this year are reaching the point where they will win over new customers, Chief Financial Officer Stacy Smith said.

“In five years, every device will need to connect,” Smith said in an interview yesterday at the company’s Santa Clara, California, headquarters. “We have to make these investments to participate in these huge opportunities.”

Most of Intel’s revenue comes from chips that run personal computers -- a market that’s shrinking as consumer demand shifts toward mobile gadgets. To cope, the company is seeking to win processor orders from makers of phones, tablets, cars and an array of other devices that are gaining the ability to compute and link to the Web.

Fundamental to that effort is offering chips that can connect to high-speed cellular networks, an area where Qualcomm Inc. has forged a dominant market share and driven out competitors. Earlier this week, Broadcom Corp. said it plans to sell or shut its cellular-baseband business.

Intel reported a first-quarter loss of $929 million in its mobile and communications group as sales plunged 61 percent to $156 million. The results prompted investors such as Michael Shinnick, a fund manager at Wasatch Advisors Inc., to say in April that Intel might be better off closing the unit and turning its efforts to manufacturing chips for other companies.

The company was slow to introduce chips that were power-efficient enough to run tablet computers. That’s changing now, and Intel is aiming to have 15 percent to 20 percent of the tablet market by units shipped this year, Smith said.

Intel’s stock, which is up 6.6 percent this year, rose less than 1 percent to $27.66 at yesterday’s close in New York.

(An earlier version of this story was corrected to reflect that Intel’s target for tablets is for market share by units, not revenue, in the seventh paragraph.)

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

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward, Stephen West

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