Many Intel (NASDAQ: INTC ) investors have been fixated on potential Apple deals. We've heard about rumored deals in which Intel would manufacture Apple's iPhone chips in exchange for Apple using an iPad chip designed and built by Intel. We've heard about Intel potentially building all of Apple's A-series chips. While these are interesting, they're also exceedingly unlikely; Intel doesn't want to enable a competitor, and Apple's design teams are already world-class. That being said, what Intel bulls should be looking for is a meaningful presence in 2014's Google (NASDAQ: GOOG ) Nexus tablet and smartphone lineup.
Microsoft is no friend of Intel's
When Intel's long-term software ecosystem partner Microsoft (NASDAQ: MSFT ) -- famously together called the "Wintel" monopoly -- announced that it was building a version of its Windows 8 operating system, it seemed that the Redmond software giant had lost faith in Intel's ability to develop suitable low-power processors for tablets based on Microsoft's future tablet-oriented operating system. Of course, with the launch of the Atom Z2760 -- a chip that was largely considered faster than the Tegra 3 that Microsoft chose for its Surface RT tablet -- it seemed that this hedge had run its course and that future Microsoft tablets would run a full Intel Atom chip.
That's not how it happened. Despite the successful launch of Intel's Atom Z3000 series, which offers best-in-class CPU and graphics performance, Microsoft chose to forsake Intel in its Surface 2 hybrid tablet/notebook. Instead, it chose the NVIDIA (NASDAQ: NVDA ) Tegra 4. While all the rest of Microsoft's OEM partners have chosen to use Intel parts, it's clear that Microsoft is no friend of Intel's.
What about Google?
Google (NASDAQ: GOOG ) and, to some extent, its Chrome OS, are the hottest platforms on the block today. Odds are if somebody's buying a smartphone, it runs Android. And, looking at the Amazon.com best-seller lists, people love buying low-cost Chrome OS devices. Unfortunately for Intel, the vast majority of Android phones today come from Samsung. These devices run Samsung silicon or Qualcomm's (NASDAQ: QCOM ) highly integrated Snapdragon processors. Given that Qualcomm is a Samsung foundry partner, it's no surprise that Samsung is OK with letting Qualcomm's more suitable chips find their way into devices such as the Galaxy Note 3 and Galaxy S IV.
But, there's hope for Intel. Google also supplies a very popular line of devices under the Nexus brand. These are typically well-designed devices that run stock Android -- no fancy user interfaces and built-in applications -- and sell essentially at cost. Today, Qualcomm, once again due to its superior silicon, holds all of the Nexus slots except the very old Nexus 10 tablet. But this is one set of devices that Intel can actually win if it provides leadership silicon.
When will leadership silicon arrive?
In tablets today, Intel has a sort of "half-winner" with its Z3000 chips. These are great on power, have best-in-class CPU performance, but have merely very good graphics performance. In addition, while Qualcomm's chips come with a top-of-the-line modem, Wi-Fi, Bluetooth, and NFC, Intel's platforms require a separate chip. Quite frankly, while today's chips from Intel are a big improvement from what it had a year ago, it's still not quite ready to go up against Qualcomm.
But next year could be different. Intel is moving to its 14-nanometer FinFET manufacturing technology for its chips (FinFETs mean more performance at less power), and it will significantly revamp its designs, particularly on graphics. If Intel gets its timing right, then it can use chips built on this 14-nanometer process against products built on TSMC's (NYSE: TSM ) 20-nanometer process, giving it a significant head start. However, if products built on the 20-nanometer technology hit the shelves before Intel's 14-nanometer products arrive, then it could be a much more difficult fight for the designs that matter.
Foolish bottom line
Watch for devices under the Nexus brand that sport Intel platforms. If Intel can land such a win -- any win -- then it will bolster confidence among investors and will mean that Intel is finally in the game. While the war is no means won in winning a single design -- Intel needs to be there year-after-year with great products -- Intel bulls need a real confidence boost after taking it on the chin for two years during one of the biggest bull-market runs in history.
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