Intel says tablets and phones on the way in 2011

SAN FRANCISCO (Reuters) - Intel Corp said it is making headway getting its chips into tablet computers and that smartphones using its processors will go on sale late next year as it rushes to catch up in the fast-growing mobile market.

A shadow is cast on an Intel advertisement at the Computex 2010 computer fair in Taipei in this June 1, 2010 file photo. REUTERS/Pichi Chuang

The company is betting that new chips due to ship next year will invigorate its mobile business, which has struggled to get off the ground amid explosive sales of Apple’s iPad tablets and smartphones using Google’s Android operating system.

“The consumer (tablet) products will roll out over the first half of next year,” Chief Executive Paul Otellini told analysts at a conference.

He said manufacturers have agreed to use Intel chips in 35 tablet models, including a few already on the market.

On a slide, Otellini listed brands including Dell, Asus, Lenovo and Toshiba.

Intel’s Atom chips dominate netbooks but smartphone and tablet manufacturers have mostly rejected them in favor of more power-efficient chips based on ARM architecture that are made by companies like Qualcomm and Marvell.

Investors have been waiting to see to what extent major manufacturers choose Intel’s chips for high-profile consumer tablets due out next year.

“Intel is moving in the right strategic direction but they still have a long way to go,” said Hendi Susanto, an analyst at Gabelli & Company. “They’re late into the game. There is no clear visibility on what the products look like.”

Underscoring the importance of staking out territory in mobile, Intel’s share of the world semiconductor market slipped marginally to 13.8 percent in 2010 from 14.2 percent the year before after sales of netbooks were hurt by weak consumer sentiment, market research firm Gartner.


Otellini called Intel’s pursuit of the smartphone market “a marathon, not a sprint,” adding that the company’s second-generation Medfield chip is now being sampled by customers and should ship next year and in 2012.

“You will see smartphones from premier branded vendors in the second half of 2011 with Intel silicon inside them,” Otellini said.

Stock in the world’s largest maker of microprocessors rose 1.11 percent.

Otellini also Intel has resumed share repurchases after stopping over a year ago due to the tough economy.

“I’m happy to report that Intel has been back in the market this quarter,” Otellini said. “The buyback has resumed.”

In November, Intel said it was boosting its quarterly dividend by 15 percent, a move seen as a sign of confidence that the world’s largest chipmaker is growing, even as the U.S. economy remains sluggish.

A resumption of Intel’s share repurchases amplifies that signal, said Craig Ellis, an analyst at Caris and Company. “Shareholders will look at that and say management is putting their money where their mouth is,” he said.

Intel has already started shipping its new Sandy Bridge chips, which are expected to be in notebooks on store shares early in 2011.

The Sandy Bridge microchips, Intel’s newest PC chips, include graphics processing capability that the company says is equivalent to low-end discrete graphics processors.

Reporting by Noel Randewich; editing by Andre Grenon, Derek Caney and Bernard Orr