Intel To Revamp Struggling Wireless Unit
By Carlo Longino, Thu Dec 11 18:30:00 GMT 2003

Just a week after a $600 million write-down of the value of an acquistion Intel hoped would establish it as a major player in the wireless industry, the company said it will fold its money-losing wireless unit into its networking business.

The move reflects the reality that Intel's strategy to buy its way into the industry hasn't played out as well as the company would have liked. The 1999 acquisition of DSP Communications hasn't given it a foothold in chips for phones on today's GSM and CDMA networks, and handset manufacturers have balked at the company's PXA800F chip, seeing it as packing more processing power than needed and using too much battery power. The wireless unit is also reeling from a major misstep in flash memory pricing early in the year that saw the company cede much ground to rivals like Advanced Micro Devices.

While Intel's XScale processor has been a hit in the Pocket PC PDA market, it's failed to attract a single major handset vendor. And in a year when the rest of the company's business grew, the wireless business is off 12%. Entrenched rivals like Texas Instruments and Qualcomm have thus far been able to stave off Intel's efforts, and it looks as if it would take a pretty hefty screw-up by one of those two to give Intel any serious market share.