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Intel Still Struggling in Mobile as Phone Business Remains in Steep Decline

But CEO Brian Krzanich says Intel is "squarely on track" to hit its goal of powering 40 million tablets this year.

Asa Mathat

Intel’s second quarter may have gotten a nice boost from improved PC sales, but its goal of building a significant mobile business remains elusive.

The company’s mobile communications unit posted second-quarter revenue of $51 million, down 83 percent year on year and off 67 percent from the first quarter. That compares to more than $8 billion in PC chip sales.

Even Intel’s software business generates 10 times as much revenue as the mobile business.

That said, Intel CEO Brian Krzanich told analysts on a conference call that the company was “squarely on track” to hit its goal of powering 40 million tablets this year, with 10 million Intel-powered tablets having shipped in the second quarter.

CFO Stacy Smith said that the healthy growth in tablets was more than offset by weakness in the phone business, where much of Intel’s revenue came from modems for feature phones. The company has ambitions to see its processors and modems in modern smartphones, but meaningful progress there isn’t likely until next year.

In particular, Intel was slow to develop modems capable of supporting high-speed LTE networks.

“We have some ground to make up,” Krzanich acknowledged.

Smith said that if the company didn’t continue to invest in mobile it would find itself locked out of significant business in two years’ time. He did say that the unit’s losses should narrow next year.

“It won’t be profitable, but we should be able to improve it nicely.”

Here’s a chart of the company’s mobile business sales and losses over the last several quarters.

On the PC side, Intel said the improvement remains largely centered on businesses. While there are “some signs” of renewed consumer PC buying interest, Intel said the consumer segment remains “challenging,” especially in emerging markets.

“We have important work to do in the months ahead,” Krzanich said.

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