Intel Corp is said to have designed a handset that may be manufactured by China’s ZTE Corp.
SAN FRANCISCO: Intel Corp, aiming to gain a toehold for its chips in the mobile-phone market, has designed a handset that may be manufactured by China's ZTE Corp, according to two people with knowledge of the plan.
Intel has supplied a design for the phone, based on a version of its Atom microprocessor, that may go on sale in China, said one of the people, who declined to be identified because the project hasn't been made public.
The chipmaker seeks partners to help it break into the smartphone industry and help lessen its reliance on personal computers. The challenge is making inroads against processors using technology from ARM Holdings Plc (ARM), which dominates the phone business. A deal with ZTE, based in Shenzhen, China, would give Intel access to the eighth-largest phone manufacturer.
"The market eagerly awaits Intel's first product," said Doug Freedman, an analyst at Gleacher & Co, who has a "buy" rating on Intel. "After two years of nothing, it's past due."
There are no phones now on sale that use Intel processors. The company's efforts suffered a blow in February, when Nokia Oyj scaled back a project to make devices using an operating system jointly developed with Intel. Instead, Nokia plans to concentrate on smartphones running software from Microsoft Corp.
Claudine Mangano, a spokeswoman for Intel, declined to comment on whether Intel is working with ZTE.
"In terms of the overall market, we recognize that we have some work to do, but we're patient and we're committed to the business," Mangano said. "We have the right elements to be successful. We are working on a number of engagements, but are not ready to talk about them."
Management change
ZTE's handset division has held talks with Intel, said Margrete Ma, a spokeswoman for ZTE. Ma said she had no further information available.
"It is just discussion and cooperation on a technical basis for the time being," Ma said in an April 11 interview.
Anand Chandrasekher, Intel's top executive focused on phones, resigned last month. The company will continue to make investments to ensure that its chips are used in phones and that a handset goes on sale later this year, Dadi Perlmutter, Intel's executive vice president, said at the time.
Intel, based in Santa Clara, California, rose 10 cents to $20.12 on the Nasdaq Stock Market yesterday. The stock has lost 4.3 percent of its value this year.
The chipmaker's leadership in PCs hasn't given it an edge in the handset market -- an industry that's more than four times bigger in terms of shipments. Qualcomm Inc. (QCOM), Texas Instruments Inc. and Samsung Electronics Co., which rely on ARM designs, are the biggest makers of phone chips.
ZTE shipments
Among phone manufacturers, ZTE accounted for 1.8 percent of 1.6 billion handsets shipped to end users last year, according to Gartner Inc. Nokia, Samsung, LG Electronics Inc., Research In Motion Ltd. (RIMM), Apple Inc., Sony Ericsson Mobile Communications AB and Motorola Mobility Holdings Inc. ranked ahead of ZTE.
ZTE said in January that its global shipments of mobile- phone handsets, tablets and wireless data cards will climb 33 percent to 120 million units this year. Its sales of those products gained almost 50 percent last year to 90 million units.