Intel May Shed Communications Biz

Under increasing competitive pressure, Intel is being forced to sell most of its communications business in order to focus on its core initiatives. On the chopping block is the company's unsuccessful mobile phone and networking chip businesses, the Wall Street Journal reported on Tuesday.

Although the company is not commenting on the situation, sources close to Intel say it has already approached potential buyers in an effort to offload the struggling parts of its overall business.

Intel has come under increasing competition from rival AMD, which has begun to eat into the company's dominance in processors. Intel is also undergoing an internal review to assess how the company could be restructured to improve both sales and profitability.

That initiative, announced in April, is expected to be completed at the end of July. It is possible that an announcement on any sale could come at that time. Intel CEO Paul Otellini has expressed displeasure at being nothing more than a "niche player" in the mobile chip market, lending credence to talk of a sale.

While the company's XScale chips have done well in high-end phones, it has had little success in marketing its lower-end chips to device makers. The result have been huge losses for the communications arm, likely between $500 million and $1 billion a year.

Intel no longer breaks out data for its communications division. However, in 2004 the division posted a loss of $791 million on revenue of $5 billion.