Intel to Sell Comm Businesses, Report Says

Staff Reporter -- Electronic News, 6/5/2006

After years of investing in communications businesses as a way to diversify from its core microprocessor business, Intel is now reportedly giving up and selling them.

The chip giant has put much of its communications business up for sale, according to a report in the San Jose Mercury News, which attributes the information to sources who have seen documents describing the businesses that Intel plans to sell.

The sale plan comes just over a month after CEO Paul Otellini announced that Intel would undergo a deep efficiency review that would result in a restructuring that targeted unprofitable businesses.

And while Intel has invested more than $10 billion in its entire collection of communications businesses over the last decade, according to the report, many of those businesses have lost money, and what’s more, they are no longer worth what Intel paid for them.

The businesses that are reportedly up for sale include:
- the communications processor business which includes the IXP network processor and communications processor families.
- the Xscale business, which includes applications processors for handheld devices such as cell phones, smart phones and MP3 players.

Last month Intel revealed plans to close its Glasgow, Scotland facility that made Ethernet MAC products as part of an overhaul of Intel’s communications group. At the time, a spokeswoman said that the communications overhaul was well underway before the larger company-wide efficiency review. 

Intel is also rumored to be planning significant job cuts.

The fate of Intel’s other un-profitable businesses – NOR flash and Itanium server processors – remains unclear.