Intel to Make More Flash in Midst of Reorg

Faced with slipping market share for its microprocessors, Intel has decided to increase its investment in NOR flash memory chips, as published reports suggest it will sell off two of its communications processor families.

Intel plans to add a 3-volt version to its StrataFlash embedded memory family (now available in 1.8 volts) and launch its first-ever serial flash product, both by the fourth quarter of 2006, the company said Tuesday.

In separate news, Intel has begun looking for a buyer for its xScale and IXP network processor chips, used in smartphones, according to a story in The Wall Street Journal. Internet blogs are also reporting that Intel is trying to sell a separate communications division called Dialogic, which makes telephony software and network interfaces.

Intel declined to comment on the reports.

Both moves could be related to Intel Chief Executive Officer Paul Otellini’s promise to reorganize the company in light of weak earnings reports in recent quarters. Intel has been losing market share to rival Advanced Micro Devices while missing its earnings targets.

In an April meeting with analysts, Otellini said he would “restructure, repurpose and resize” the company after predicting profits would fall from US$12.1 billion in 2005 to $9.3 billion in 2006.

Since then, the company has made three moves: announced plans to close an Ethernet networking office in Glasgow, Scotland; shut down an optical platforms division in Newark, California; and combined its NAND and NOR flash memory groups into a single division.

Intel sees a potential payday in the fast-growing NOR memory market. NOR chips are a crucial ingredient for embedded devices from consumer electronics to PCs and industrial electronics.

Excluding handsets, the market is forecast to be $2 billion to $3 billion in 2006. Then the market will double in size between 2006 and 2010, said Darin Billerbeck, vice president and general manager of the Intel Flash Products Group in Santa Clara, California.

Vendors use three-volt embedded memory chips in set-top boxes, base stations and networking equipment. They use serial flash for DVDs, digital TVs, printers and PCs.

-Ben Ames, IDG News Service