San Jose, Calif. -- Is Intel Corp. planning to sell or spin off its loss-ridden NOR flash memory unit?

The company said earlier this month that it would bring its NOR flash memory fabs and memory process technology development effort within its flash memory group in a reorganization of those activities.

The move prompted analysts to wonder about the unit. "The company recently separated NOR flash production from core Intel operations, likely signaling the IPO or sale of the business," Doug Freedman, an analyst with American Technology Research Corp., said in a report.

Intel denied the analyst's speculation. The company said it "is not planning to sell or spin out" its NOR flash business.

Still, many believe Intel is putting more resources into rival NAND flash, which is growing much faster than NOR. The chip giant also has a joint NAND flash memory venture with Micron Technology Inc., dubbed IM Flash Technologies (IMFT) LLC.

An Intel spokeswoman said, "We have aligned our NOR flash memory product development, technology development, marketing, manufacturing and logistics support operations under the flash memory group, managed by Intel vice president Brian Harrison."

She said the goal was to "create closer synergy among all the organizations involved in developing, manufacturing and delivering NOR flash memory products to customers worldwide."

"We expect this alignment will create greater efficiency and productivity for the NOR flash memory business," she said. "Our NAND flash business is also part of the flash memory group [as it has been]. Our NAND flash is manufacturing though IMFT, our joint manufacturing venture with Micron."

At the same time, hit hard by the PC slowdown and stiff competition, Intel last month said it plans to restructure the company. Paul Otellini, chief executive of Intel (Santa Clara, Calif.), told analysts he plans an overhaul that will affect "every part" of the company within the next 90 days.

If Intel spins out the NOR unit, the move would mirror a similar step taken by processor rival Advanced Micro Devices Inc. Last year, AMD spun out its NOR unit, Spansion LLC, into a new and independent company.

Many NOR flash vendors have been scrambling to provide a NAND offering due to dwindling sales for NOR.

Other concerns
Meanwhile, besides NOR flash, which is losing money for Intel, the microprocessor giant has other nagging issues as well. "Intel's platform strategy backfires, adding cost to platforms and accelerating share loss to AMD," Freedman, the American Technology Research analyst, said, referring to Intel's strategy to provide a "platform solution" for PC OEMs.

"We believe that vPro is not being well-received by the PC channel partners as it adds undue cost and complexity to the enterprise market," Freedman said, referring to Intel's newly branded corporate desktop processor strategy.

"Intel believes that platforms are the solution to many issues, given the success of Centrino," he said. "We think Centrino had outside factors that drove increased adoption." In contrast, "vPro and Viiv do not have the same outside investment benefits and are likely to be far less successful."

Other troubling issues loom for Intel as well. "Management is beginning to see that the R&D expense load they have been carrying throughout their history is no longer necessary," the Freedman said.

"There is no longer a great difference between processors in the notebook, server and desktop segments, and the company can now begin to leverage this fact in its R&D budget. This has also allowed Intel to move to its recently announced two-year plan," he said. "It now plans on moving architectures every two years, as opposed to its previous every four years. We believe that this shift is the right decision for a dominant player attempting to protect a monopoly. It is wise to make your competitors with less financial prowess play catch-up."