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Intel talks up new chips as major advance

Intel CEO Paul Otellini talks during the company's unveiling of its second generation Intel Core processor family during a news conference at the Consumer Electronics Show (CES) in Las Vegas January 5, 2011.

RICK WILKING/REUTERS

Intel Corp took the wraps off its next-generation microchips Wednesday, saying their superior graphics and content protection capability marked one of the company's most important advances.

The chipmaker also shed light on a new partnership that includes Time Warner Inc's Warner Bros Digital Distribution, News Corp's Twentieth century Fox Home Entertainment and Best Buy to stream high-definition movies to personal computers running the new chips.

Chief Executive Paul Otellini said the new chips, code-named Sandy Bridge, will yield about a third of its corporate revenue in 2011 and help trigger more than $125 billion in sales for the personal computer industry.

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"This is the biggest launch of the year, but it's beyond that," he told reporters at the Consumer Electronics Show in Las Vegas.

Although PC microprocessors are Intel's bread-and-butter, investors are eager to hear more about its plans for the booming smartphone market. But Otellini said announcements on that front will come next month at the Mobile World Congress.

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Intel, by far the largest microchip company in the world, still lags in the red-hot markets for smartphones and tablets. Smartphone and tablet manufacturers have mostly rejected Intel offerings in favor of power-sipping chips based on ARM Holdings designs.

Intel is betting that other new chips due out early next year will help it carve out a piece of the mobile market.

Its share of the world semiconductor market slipped to 13.8 percent in 2010 from 14.2 percent in 2009, according to market research firm Gartner.

Sandy Bridge microprocessors combine graphics capabilities on the chips that are the brains behind PCs. Intel claims that the integrated chips perform better than 40 to 50 percent of the dedicated graphics chips -- from companies like Nvidia -- on the market today.

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Intel says the microprocessors are far faster and include piracy protection that will make it safer for Hollywood studios to use the Internet to stream films and television shows.

Kevin Tsujihara, president of Warner Bros Home Entertainment Group, said the chips will force his company to make content a service to deliver, rather than just a product.

"You've taken the excuse away from us. We now are going to put our content out earlier, in high-definition," he said.

Intel's shares were down 1 percent at $20.95 in Wednesday afternoon trading on Nasdaq.

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