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Intel planning to combine mobile units; Smith quits

Intel Corp, the world's biggest computer-processor maker, will combine its two communications businesses as the company struggles to win customers for mobile-phone chips. The head of the wireless unit will retire.

Senior vice president Ron Smith will retire early next year, and his unit will be merged with another that builds chips for networking and communications gear, Intel said in a statement.

Sean Maloney, who runs the communications group, will lead it.

Intel needs to cut costs in the wireless business and to persuade mobile-phone clients to switch from chips by industry leader Texas Instruments Inc. Santa Clara, California-based Intel last week said it would write down a wireless acquisition by US$600 million, prompting concern that Intel is missing out as the mobile-phone market surges.

"This is the right move to make, given the cloud over the wireless group," said Krishna Shankar, a JMP Securities analyst who rates Intel "market outperform" and said he owns some shares. "Maloney seems to have a good track record of focusing on the essentials. He's probably the right guy."

Smith, 53, has been with Intel 26 years and helped develop its early processors and its effort in flash-memory chips. Smith has no specific career plans once he leaves Intel and will assist in the transition, spokesman Bill Calder said.

Combining the units also will help cut costs, he said. Both businesses had operating losses in the most-recent quarter. The wireless group's loss widened to US$124 million from US$30 million a year earlier. The communications group's loss narrowed.

Sales in the wireless unit fell 23 percent to US$450 million, while revenue from communications chips increased 13 percent to US$544 million.
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