Intel Finds First Customer for Its Cellular Phone Chip

From Times Wire Services

More than two years after introducing its first chip for cellular phone communications, Intel Corp. finally has a customer.

The world's largest chip maker said Thursday that O2, a British mobile communications company, would begin selling a music phone that uses Intel's Manitoba chip.

The chip, released in February 2003, has been widely considered a failure.

David Rogers, an Intel marketing manager, said the Santa Clara, Calif.-based chip maker reformulated the Manitoba chip to lower its price, and that helped attract O2.

The phone will retail for 199 pounds, or about $360, and will be available in Britain and Germany.

Despite comments by Chief Executive Paul Otellini that Intel must become a top player in both communications and computing, the company's struggling cellphone efforts have long been a thorn in its side.

The market for baseband processors, the fundamental brains of cellphones, is dominated by Texas Instruments Inc. Intel previously had success only in mobile phones with applications processors, chips that run secondary functions such as organizers and music players.

The sale to O2 culminates years of effort by Intel to get into a market that's growing faster than personal computers, which provide the majority of the chip giant's sales.

Intel, which did not disclose the maker of the new phone, also said its new chip code-named Hermon -- which operates on third-generation cellular networks -- was still on track to be introduced in the second half of the year.

Shares of Intel rose 30 cents to $27.59.

Bloomberg News and Reuters were used in compiling this report.

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