Bloomberg News

Intel Abandons Plans to Get Its Processors Into Televisions

October 11, 2011

(Updates share price in final paragraph.)

Oct. 11 (Bloomberg) -- Intel Corp., the world’s largest chipmaker, is giving up on an effort to get its processors into televisions after failing to gain a foothold in the market.

The company, which will continue supplying chips to TV set- top box makers, plans to move resources to a group focused on tablet computers, said Claudine Mangano, a spokeswoman for Santa Clara, California-based Intel.

“This is a business decision where we’re taking those resources and applying them to corporate priorities,” she said. The company decided that engineers at its Digital Home Group should focus more on tablets, smartphones and a new category of laptops, which Intel is calling Ultrabooks, she said.

By walking away from TVs, Intel is exiting part of a market that Chief Executive Officer Paul Otellini targeted as he sought to lessen the company’s reliance on personal computers. Intel has won set-top box orders from Comcast Corp., the largest U.S. cable company, and some European television service providers, and has supplied chips for Google Inc.’s Google TV devices made by Sony Corp. and Logitech International SA.

While Intel’s processors run more than 80 percent of the world’s PCs, its line of lower-power chips, called Atom, have yet to stimulate significant sales growth outside computing.

“It’s never been big enough to be a footnote even in their earnings statements,” said Cody Acree, a Dallas-based analyst at Williams Financial Group. He has a hold rating on Intel’s stock.

TV Makers

Intel has been unable to provide a chip that offered significantly different performance from rival offerings, and failed to convince TV makers such as Samsung Electronics Co. or Sony Corp. that they needed its chips, Acree said.

Comcast is using an Intel product in its Xfinity TV set-top device, which will offer improved on-screen navigation, search and other programs. Pace Plc is building the boxes for Comcast. Google TV products with Intel processors have fallen short of sales targets in the U.S.

Intel shares rose 11 cents, or 0.5 percent, to $22.99 at the close in New York. The stock has gained 9.3 percent this year.

--Editors: Nick Turner, Jillian Ward

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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