Intel to Make Its Own Communications Chips

Beefing up its commitment to produce chips for the telecommunications industry, Intel Corp. will announce today that it will begin making its own communications chips.

The Santa Clara, Calif., semiconductor giant will use a new manufacturing process that produces the world’s smallest commercial transistors. Intel currently contracts with other companies to manufacture its communications chips.

Although sales of communications chips made up less than 10% of Intel’s revenue in 2001, Intel is betting that the telecom industry eventually will lift from its malaise.

“These are markets that Intel is turning to for future growth, so it’s very important to them,” said Joseph Byrne, an analyst with technology research firm Gartner Inc.

The move pits Intel in more direct competition with Broadcom Corp. and Conexant Systems Inc., two Southland companies that sell chips for cell phones and high-speed networking equipment.

By making the chips in-house, Intel can integrate computing and communications functions on a single piece of silicon, making them less costly.

Intel also will use its new manufacturing process for making circuits that are 90 nanometers wide, one-third less than current industry standards. Smaller circuits run faster, use less power and take up less room, lowering overall costs. Intel expects to begin selling these chips in the second half of 2003.