Intel Is Said to Plan Sale of Majority Stake in AR Glasses Unit

(Bloomberg) -- Intel Corp. plans to sell a majority stake in its augmented reality business, which aims to start offering smart glasses to consumers as soon as this year, according to people familiar with the plan.

The chipmaker values the division at as much as $350 million, said the people, declining to be identified since the plans aren’t public. Intel is seeking multiple backers to invest in the unit, which has been developing smart glasses that pair by Bluetooth with a mobile phone.

The spectacles will be able to display contextual information into the wearer’s field of view with a laser-based projector that reflects off the lens and onto the retina, the people said. Taiwan’s Quanta Computer Inc. is making the product under contract for Intel. The technology is known internally as Superlite, but the business to be sold will likely be called Vaunt, the people said.

An Intel representative declined to comment.

Intel has pared back some of its consumer product efforts after failing to make progress in the market for wearable technology. As part of that retreat, it shuttered the Recon augmented-reality goggles business that it acquired in 2015. Some former members of the Recon team are part of the division up for sale. It has about 200 employees in the U.S., Switzerland and Israel.

Intel intends to attract investors who can contribute to the business with strong sales channels, industry or design expertise, rather than financial backers.

Such ventures by Intel, part of a broader effort by Chief Executive Officer Brian Krzanich to parlay the company’s dominance in computer chips into new markets, struggle to make a noticeable dent on its finances. The company posted a record annual revenue of $62.8 billion last year. More than half of that came from personal computer processors, and some $19 billion from data center business. Its top-of-the line server chips sell for $13,011 each. Even major chips in expensive consumer devices such as smartphones cost only tens of dollars each.

Apple Inc. and Amazon.com Inc. are both developing their own smart glasses, while Alphabet Inc.’s Google refocused its product on business customers earlier this year, after an aborted attempt to sell to consumers. Intel will likely vie to supply technology for such devices, and even if its offering fails to secure widespread adoption, it may serve to demonstrate its technology to potential customers.

The market for augmented and virtual reality hardware could be worth as much as $110 billion by 2025, with another $72 billion in software revenue, Goldman Sachs Group Inc. estimates. That would still be considerably smaller than the global smartphone market, which researcher IDC expects to tip $454 billion this year.

To contact the reporters on this story: Sarah Frier in San Francisco at sfrier1@bloomberg.net, Ian King in San Francisco at ianking@bloomberg.net.

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, Molly Schuetz, Andrew Pollack

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