Intel looks at the future. In the future it sees, it destroys several industries--and creates entire new ones:

Fortune.com: ...communications chips are what Intel thinks will drive its growth. The chips allow notebooks to speak wirelessly to networks, enable cellphones to make calls, and help route web pages, e-mail, and streaming media around the Internet. Intel thinks it can win business by finding a way to marry computing and communication, quite literally on the silicon chips themselves.

Chief technology officer Pat Gelsinger dubs the strategy Radio Free Intel. Simply put, he wants Intel to incorporate, right into many of its processors, radio transceivers that can automatically detect and connect to hot new Wi-Fi wireless networks and even cellphone networks. "How can we beat Texas Instruments or Motorola, companies that have decades more experience than we do in communications technology?" Gelsinger asks. "By changing the rules and defining a new architecture for integrating communications into smart devices. We want to make a radio transceiver something that you expect to be just another feature of just about any device with a microprocessor."

The most accessible market for Intel's radio-enhanced processors is mobile PCs. By the end of the year Intel will begin shipping samples of specially designed chip sets for notebooks that include ultra-low-power Pentium processors, graphics chips, and other support circuits, and a built-in ability to attach to a Wi-Fi network. These chip sets will enable a notebook computer to sense and connect with wireless networks as its owner moves around, and even switch from one network to another on the fly. "In mobile computing, to focus on the processor performance as we have in the past would be missing the point," says Anand Chandrasekher, the vice president in charge of the product line. "The trick is to make all the extra performance that wireless requires invisible, so it just works, and the user can count on it."

A second big target for the Radio Free Intel initiative involves cellphones and PDAs--markets Intel competes in but doesn't dominate. This year 400 million cellphones will be sold, and many of them will contain Intel's flash memory chips. But phones are also getting smarter and beginning to resemble PDAs in their ability to handle address books, calendars, and the like. Meanwhile Intel's XScale processor is the brains for most PDAs that use Microsoft's Pocket PC software, and it recently won the support of Palm. It has a shot at becoming an industry standard, much as the Pentium is the standard processor in the PC.

Intel's grand plan is to couple its XScale chip with flash memory as a way to get more of its chips into cellphones. It also plans to use the same part, attached to a new Wi-Fi chip, to make PDAs more versatile communicators. Ultimately Intel wants to put everything--the communications transceiver for both Wi-Fi and voice cellphone service, the XScale processor, and loads of flash memory--into a single part that would function equally well as the heart and soul of a PDA or a cellphone. Creating that can be achieved only if Intel can make chips with much smaller transistors, and if it can learn how to place radios, logic circuits, and memory in the same chip package without having their electrical signals interfere.

To make headway in cellphones Intel will have to usurp entrenched rivals like TI. The worldwide leader in communications chips, it commands more than 50% of the market for the processors in cellphones. "When another company, even Intel, announces its intentions to enter your space, your customers don't just roll over," says a TI spokesman. "Our relationships with cellphone-handset makers are well established." Plus, while success in the microprocessor business depends largely on continually optimizing a single, complex chip and a few support circuits, big players in the communications chip business make their money by developing and supporting dozens of different kinds of more specialized chips, many of which don't really need the latest, greatest manufacturing process. Then there's the problem that profit margins for these chips--unlike those for Pentiums--are slim.

Intel has another major target in mind for its communication chips: the iron deployed by telecom carriers and equipment suppliers. Over the past four years Intel has spent $10 billion acquiring 27 companies that are involved in various aspects of networking technology, from network processors to wireless technology to optical-switching systems for fiber-optic networks.

Now Intel is focused on creating a network processor that would be the telecom world's equivalent of the Pentium. Network processors are the superfast switching circuits at the core of the gear that routes digital data around the Internet. So far the world has no network processor standard; companies like Lucent, Nortel, and Cisco buy specially designed chips and create their own software tools, each in hope of gaining an edge in switching performance or programmability. The other appeal of this proprietary approach is that customers tend to stick with one supplier once they've become familiar with its programming tools.

That kind of diversity has to end, argues Sean Maloney, executive vice president for the Intel Communications Group. "I don't deny that competition is good, but the telecom industry has never really benefited from Moore's Law because most of those proprietary network processors weren't made in large enough volumes to warrant leading-edge manufacturing technology. A standard part made with state-of-the-art manufacturing technology, coupled with a set of standard programming tools that are derived from PC software tools, could finally bring Moore's Law to telecom."

Maloney's group recently announced a high-performance network processor chip called the IXP. Designed to be a key component in routers and digital switches, the IXP is capable of processing up to 6.6 gigabits each second of web pages, e-mails, streaming media, queries, and other Internet traffic--that's roughly equivalent to the capacity of 4,500 home broadband lines...

The ebullient Maloney, as might be expected of a man who once ran Intel's sales and marketing group, thinks there's a silver lining for Intel in the telecom collapse. Says he: "My telecom customers have laid off 270,000 people in the past two years. A lot of them are engineers who designed their proprietary networking equipment. The telecom companies will never have that much engineering capability again. Our proposition will be to let us take care of developing the core components so that they can concentrate on tailoring gear and services to particular markets. Then they can ride along on the coattails of Moore's Law just as the computer industry has."

Such optimism may sound weird coming from a company whose unofficial mission statement has long been "Only the paranoid survive." But optimism about Moore's Law runs just as deep in the Intel psyche. Time and again pundits have warned that chipmaking will top out as circuits shrink to the size of atoms. But Sunlin Chou and his peers in the chip industry keep finding new ways to cram even more transistors onto silicon. "Opportunities aren't dwindling, they're exploding," says Chou. Besides, he adds, "in the end, Moore's Law is a philosophy as well as a strategy. It gives us the confidence to believe in the future."

Just ask Andy Grove, the Hungarian emigre who, for all his success and notoriety, has seen his share of dark moments. You have to have faith, he says, and extrapolate where technology could lead, much as Gordon Moore did 37 years ago. In his original article, written when telephones still sported rotary dials, and color TV was a novelty, Moore presciently predicted that "integrated circuits will lead to such wonders as home computers, automatic controls for automobiles, and personal portable communications equipment."

Here's Andy's prediction: "You know that saying, 'The Internet changes everything'? People now are backing away from it, but I say, Just wait five years. Hundreds of billions of dollars we now spend on voice telecommunications will become a freebie--just like [Cisco CEO] John Chambers has said. That's Moore's Law at work. The entire entertainment industry will be digitally distributed over broadband networks. [Media companies are] going to tip over, because one of them, with its back to the wall, will make the transition, and the others will have to follow. That's Moore's Law at work. Houses will be wireless, broadband will be delivered wirelessly, and home and portable computers and consumer electronics are going to be built to facilitate all of the above. Okay, it hasn't happened in the first five years; it's going to take ten. And there will be a lot of pain for some. But it will happen, and we'll all benefit."

That's why, at a time when other chipmakers fear that living up to Moore's Law might be a bridge too far, Intel still believes it's the only way to go.