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Intel Redefines Itself, Expands Contract Manufacturing

Intel Redefines Itself, Expands Contract Manufacturing
By Barry Levine

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CEO Brian Krzanich said that while Intel's contract manufacturing is only a small portion of its revenue, its expansion could help the company in its aim to play a bigger role in developing chips and other technology for smartphones and tablets. If the company can make chips for mobile devices, that will cut market share for rivals Qualcomm and Samsung.
 


As part of its effort to redefine itself, Intel has decided to provide contract manufacturing to all takers. Previously, it would only manufacture for selected clients.

During an investor meeting in Santa Clara, Calif., on Thursday, CEO Brian Krzanich said that the company was prepared to focus "on a much broader set of customers." Until this change, Intel's advanced manufacturing was offered only to such chosen customers as Altera and Netronome, which develop field-programmable gate arrays.

Because of the slackened demand for PCs, Intel has been left with extra capacity in its factories, so it is now looking to enter the contract manufacturing market occupied by such companies as Taiwan Semiconductor and GlobalFoundries.

'Better Than Anyone Else'

Intel's contract manufacturing is only a small portion of its revenue, but its expansion could help the company in its aim to play a bigger role in developing chips and other technology for smartphones and tablets. If the company can make chips for mobile devices that help to cut down the market share of mobile chips manufactured by Qualcomm and Samsung, the contract manufacturing move could expand revenues, employ unused capacity and create competition for its rivals.

According to Reuters, Krzanich said that anyone "who can use our leading edge and build computing capabilities that are better than anyone else's -- those are good candidates for our foundry service."

Intel has also said that it is developing a phone processor, currently named SoFIA, that will offer 3G and HSPA+ and will be manufactured at a non-Intel facility.

Meanwhile, Intel is moving forward on other fronts as well, including three temporary retail stores that will open for the holiday period. The stores -- in the Manhattan borough of New York, in Chicago and in Venice, Calif. -- will feature products employing Intel technology. That's a big slice of the PC market -- over 80 percent -- but the company particularly wants to promote its presence in mobile devices.

No to Intel TV

The spaces rented for these pop-up stores were originally intended for another new Intel initiative that now appears to have been discontinued. The company was widely reported to have rented the retail spaces to launch its Intel TV, with which it intended to shake up the television industry and become the new entertainment hub in living rooms.

But Krzanich, who assumed the CEO role in May, decided to nix the project because of its pricetag and distraction. Launch costs were expected to be in the hundreds of millions of dollars. Krzanich has pointed out to news media that his company is not an expert in content, although Intel had hired an ex-BBC executive to lead the effort, backed by a staff of more than 300.

According to news reports, Intel is now looking to sell its OnCue TV technology, and there are reports Verizon is kicking the tires.
 

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