Going small: Tiny technology will expand market, Intel CEO says

NEW YORK — Intel Corp.'s push to create and boost new categories of small, cheap Internet-connected devices is taking the world's largest chip maker in some unusual directions.

It's investing in wireless networks, or even buying them outright. It's relying on software that isn't from Microsoft. And it's looking at making processors cheaper and smaller, rather than faster and faster.

To Chief Executive Paul Otellini, it's all part of bringing the Internet to new places and people, and computer makers are responding.

"I've not seen energy like this from our customers in a long, long time," Otellini told The Associated Press on Wednesday. "Everyone views this as being sort of hyperexpansive to the existing market."

A centerpiece of the strategy is the Atom processor, which packs the power of a PC-class processor from six years ago into the smallest space yet — 25 Atoms will fit on a square inch. It's intended for Mobile Internet Devices — iPhone-like tablets that provide a "full" Internet experience, better than that available on cell phones.

Somewhat larger than the MID is what Intel calls the "netbook," a small, cheap laptop. Taiwan's AsusTek has had a breakout hit in this category with its eeePC, which starts at $300 and uses an Intel chip. Other manufacturers, like Hewlett-Packard Co., also are entering the space, though HP is using a chip from Via Technologies Inc.

Otellini isn't concerned that low-power processors could "cannibalize," or steal, sales from Intel's high-end, high-margin products.

"If a higher-priced notebook isn't substantially better and doesn't offer more utility, shame on us," he said. "If there's cannibalization, I'd rather be the cannibal than someone else."

The company's push with the Atom processors comes as it has seen diminished profits with its type of memory chip called NAND flash, commonly used in digital cameras and MP3 players. Intel has operations worldwide and employs 300 workers at its Riverton, Utah, location and approximately 1,800 in its joint venture with Micron Technology Inc., IM Flash Technologies, which is based in Lehi, Utah.

Intel began making NAND flash in 2006 under the Lehi-based joint venture with Micron, to cash in on growing demand for the most popular type of memory for consumer electronics, a move that some analysts now say was ill-timed considering the price plunge for those chips.