Making one of his first public appearances at the Intel Developer Forum (IDF) on Wednesday, long-time Intel executive Sean Maloney said his company is positioning itself to become a leader in four communications-oriented segments: embedded chips, access/switching ICs, telecommunications components, and subsystems.

Intel plans "to become number one or two in these markets over the next 24 to 36 months," said Maloney, who is the executive vice president and general manager of the recently formed Intel Communications Group (ICG), in a press event at IDF.

To reach its lofty goals in communications, the company intends to take a page from its core microprocessor business. It plans to displace traditional ASICs that are used heavily in communications equipment by pushing lower-cost "standardized" components in volumes, Maloney said.

One of the rising stars at Intel, Maloney was appointed to his current post in March, when the company combined its separate communications IC and systems businesses under one umbrella (see March 14 story). Maloney--once a technical advisor to Intel chairman Andrew Grove--was in charge of Intel's worldwide sales and marketing operations before his current post.

But still, given Intel's lagging position in communications, the company faces some challenges to reach its lofty goals, said analyst Allen Leibovitch of RHK Inc., a market research company in South San Francisco, Calif.

"Intel is still behind its competitors like Broadcom in communications ICs," said Leibovitch, referring to the communications-chip maker of Irvine, Calif.

Other analysts indicated that Maloney is the right man for his current post. The British national is a no-nonsense, turnaround artist, who was brought in to restructure--if not fix--Intel's communications business, according to analysts.

But even Maloney himself acknowledged that the company faces some challenges, especially given the current downturn in the communications industry.

The Intel executive sees no sign of a recovery in the troubled communications segment. "I don't see a recovery," he said "I have read about a recovery, but I am skeptical. We are planning that the business will be tough for some time to come."

In a brief interview with SBN, Maloney said he even believes the booming China is headed towards a slowdown in spending in the telecommunications segment.

Another challenge is to get Intel back on track in communications, according to analysts. The Intel executive did not break out the company's sales or earning in this segment, but analysts believe it is losing money.

In the second quarter, Intel had an operating profit of $1.46 billion on sales of $5.127 billion in its Intel Architecture Group, which makes the company's core microprocessors, chip sets, and related PC ICs. In Q2, the company in total lost $1.25 billion on sales of $1.21 billion for its non-PC chip markets, including communication ICs, flash memories, wireless chips, and even a web-hosting business.

For years, though, the Santa Clara, Calif., company has enjoyed success in many communications-equipment businesses, especially local-area networking cards for Ethernet-based networks, switches, and other products.

Intel was a niche player in communications ICs until 1998, when it stunned the industry by buying Level One Communications Inc., a communications-chip supplier, for $2.2 billion.

Then, Intel suddenly got the "communications bug" and acquired a slew of companies--and spent billions of dollars in the process.

Not every acquisition has worked out for Intel. For example, the company had trouble swallowing Level One. Shortly after the acquisition, several key Level One executives resigned from the company.

And more recently, Intel dropped one of Level One's key product lines--a chip set for symmetric DSL (SDSL) applications (see April 27 story).

"Some acquisitions we've done badly," Maloney said. "Some we've done well."

The Intel executive said the company will continue to look at more acquisitions, but he declined to elaborate. The company is also still shorting out the pieces of its new communications organization--ICG.

Prior to the reorganization, Intel's sold its communications equipment under its own brand name. But now, it is selling most of its systems on an OEM basis, ostensibly to move away from competing against its IC customers.

Recently, the company has dropped a few systems-level products, including an Internet appliance. "We're not a systems company," Maloney said. "Intel is at heart a chip, software, and boards company." In communications, Intel's strategy resembles its PC-based processor business: it hopes to penetrate the market by producing standardized components in high volumes.

Unlike the PC business, though, communications-equipment makers tend to avoid many merchant ICs and develop ASICs for their own systems.

That trend is changing, especially given the bloating chip inventories at some OEMs, according to Maloney. As a result, Intel will push more "standardized processors throughout the network," he said. "We are also going to mass produce products like Ethernet chips for wireless, LANs, and WANs," he said.

Intel claims to be one of the leading suppliers of network processors, boasting over 200 design wins for its IXP1200 family of RISC-based chips. It is also developing a new line of network processors for 10-gigabits-per-second applications (see story from IDF conference).

The company also appears to be gaining ground in another area--chips for optical networks, said RHK's Leibovitch. "Intel is showing a lot of promise in optoelectronics," Leibovitch said.

In addition to wide-area networking chips, Intel continues to move ahead with local-area networking ICs. On Wednesday, for example, it rolled out a new line of switching chips to lower the cost of copper cable-based Gigabit Ethernet networks (see Aug. 29 story).

And, Intel is also making a big push in wireless local-area networks, including big plans for the 802.11 standard.