UPDATE 1-Intel to expand contract manufacturing business -CEO

Noel Randewich
Thursday, 21 Nov 2013 | 12:14 PM ET

SAN FRANCISCO, Nov 21 (Reuters) - Intel CEO Brian Krzanich said on Thursday he planned to expand his company's small contract manufacturing business, opening the way for more chipmakers to tap into the world's most advanced process technology.

With Intel far behind rivals in making chips for smartphones and tablets, many on Wall Street have called for the company to expand its contract manufacturing business, which currently has a negligible impact on overall revenue, and to open its factories to high-volume clients making mobile chips.

"We're going go much further. If we can utilize our silicon to provide the best computing, we'll do that," Krzanich told analysts.

At his first annual investor day since taking over as chief executive in May, Krzanich said the slumping personal computer industry, Intel's core market, is showing signs of bottoming out.

"Our view is that it's declining but it's beginning to show signs of stabilization," he said.

Krzanich said that during his six-month tenure as CEO, Intel has improved its chip offerings for tablet makers and he pledged to quadruple the number of tablets with Intel chips in 2014.

He said tablets with Intel chips would range from products costing less than $100 to more than $400. Krzanich added that he recently gave every Intel board member a $149 Android tablet made with an Intel chip to demonstrate the progress Intel is making in mobile.

Intel is the world's top chipmaker and it dominates the PC industry, but it was slow to adapt its processors for smartphones and tablets - markets now dominated by rivals like Qualcomm and Samsung Electronics.

Intel shareholders, and its board, are betting that Krzanich, a veteran from Intel's cutting-edge manufacturing operation who replaced retiring CEO Paul Otellini, will be able to steer the company back on track.

"When we began our search for the CEO a year ago ... I was embarrassed that we had lost our way," Intel Chairman Andy Bryant said at the event.

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