By Lorraine Luk
TAIPEI--Intel Corp. (INTC) has agreed to help fund several touch-screen makers' investment on additional production capacity, as the U.S. computer processor giant tries to create a new market for touch-enabled laptops powered by its chips.
Intel said it has reached financial agreements with four Taiwanese touch-screen makers--Wintek Corp. (2384.TW), TPK Holding Co. (3673.TW), HannsTouch Solution Inc. and Cando Corp. (8056.OT). Intel declined to give details on how much money it will provide or the specific costs it will help shoulder.
Intel's support for the touch-screen makers is part of its efforts to promote Ultrabooks, Intel's name for a new breed of thin, lightweight laptops. Intel makes the key processors that power Ultrabooks, a category it invented last year. Despite Intel's commitment, Ultrabook sales have so far underperformed the PC maker's expectations.
Intel expects the still-nascent Ultrabook segment to find a broader audience when PC makers later this year release touch-enabled models running on Windows 8, Microsoft Corp.'s (MSFT) next-generation operating system with an interface optimized for touch-screen use.
"Intel believes that touch capability is a key component to the Ultrabook experience," said senior vice president Tom Kilroy in an interview this week.
At the annual Computex computer industry trade show that opened Tuesday, Taiwanese PC makers Acer Inc. (2353.TW) and Asustek Computer Inc. (2357.TW) are showing Ultrabooks with touch-capable screens that run on a preview version of Windows 8. Both Acer and Asustek said they expect to release Windows 8-based PCs and tablets in October.
Intel's strong push for Ultrabooks comes as the traditional PC industry has seen only modest growth in recent years, with consumer demand for gadgets shifting more to tablets and smartphones. Although Intel continues to dominate the PC market, in the fast-growing market for smartphones and tablets, U.K.-based ARM Holdings PLC (ARMH) designs most processors.
Despite the sluggish Ultrabook sales so far this year, Mr. Kilroy said Intel still maintains its "aggressive target" for Ultrabooks, counting on Windows 8 to help stimulate demand in the second half. He said Intel expects Ultrabooks to account for 40% of consumer notebook PCs by the end of the year, compared with a "very small penetration rate" now.
He added that the prices of some Ultrabooks without touch-enabled screens will likely drop to as low as US$699, making them more appealing to some consumers.
"The Ultrabook is a multi-year initiative," Mr. Kilroy said. He said that the new generation of Intel's Core processors, enhanced PC security features, and new touch-enabled models, will together help fuel demand for Ultrabooks.
New Ultrabooks that run on Windows 8 are expected to use a new version of Intel's Core chip family, code-named Ivy Bridge.
Mr. Kilroy said Intel so far has not been interested in the tablet market but the launch of Windows 8 will provide a "great opportunity" for Intel in tablets as well as Ultrabooks.
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