Sunday 19 May 2019

Intel abandons bid for stake in mobile market

 

Intel CEO Bob Swan said there is ‘no clear path to profitability and positive returns’. Photo: Bloomberg
Intel CEO Bob Swan said there is ‘no clear path to profitability and positive returns’. Photo: Bloomberg

Ian King

Intel, whose products dominate the world of computing, said it's going to wind down a multibillion-dollar, multidecade effort to grab a viable stake of the mobile phone industry.

After its one significant customer, Apple, said it will return to using Qualcomm chips, Intel announced it will exit the 5G smartphone business and assess the opportunities for existing chips and fifth-generation modems in personal computers.

"The company will continue to meet current customer commitments for its existing 4G smartphone modem product line, but does not expect to launch 5G modem products in the smartphone space, including those originally planned for 2020," it said.

Intel CEO Bob Swan, who stepped up from the CFO role in January, is stopping an effort that his predecessors poured billions of dollars into over the years. With Apple as an exclusive customer, Intel still has struggled to make money in modem chips, even as its position in other markets has fuelled revenue and profit growth. Swan said the new wireless systems will provide an opportunity for Intel to sell more chips for networking use, rather than in phones. "In the smartphone modem business it has become apparent that there is no clear path to profitability and positive returns," Swan said.

Analysts had speculated that the ascension of a leader from a financial background to Intel's top job would prompt a reassessment of some business units that haven't delivered.

Intel has struggled to win customers as the phone market eclipsed the PC industry in volume, and smartphones became more like computers. Before combining the mobile business into its PC chip division, it reported billion-dollar losses as it paid out subsidies to try to woo phone and tablet makers.

Bloomberg

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