Intel, the world's biggest maker of semiconductors, expects demand for embedded microchips to accelerate as the company expands beyond its core business of computer chips, an executive told Reuters. Intel, which last week issued a sales warning on weaker-than-expected demand for PCs, has made two major acquisitions in the past two weeks as it eyes a future in which chips are increasingly needed to connect other devices.

Doug Davis, head of Intel's Embedded and Communications Group, said in an interview he expected the market for embedded chips to grow 25 percent a year over the next four or five years, up from 18 percent annual growth in 2002-08. “Many factory machines are still not connected. That will change,” he said. He predicted that shipments of Intel's Atom chips, used in small computers such as laptops, netbooks and tablets, would eventually grow by 30-40 percent a year.

Intel has said the market for chips embedded in objects ranging from cars to medical equipment to electricity grids represents a $15 billion opportunity, and one that the company was increasingly focused on as the PC market matures. Hans Vestberg, chief executive of mobile telecoms equipment maker Ericsson, has predicted there will be 50 billion connected devices by 2020 as objects become increasingly intelligent.

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