Intel: The Smartphone Puzzle Is Nearly Complete

It's tough to buy any story without some sort of concrete evidence -- particularly one that investors have already been burned for believing for years. In this case, investors looking at investing in chip giant Intel (NASDAQ: INTC  ) are waiting to see the company finally win some designs.

The bad news is that these designs didn't materialize at Mobile World Congress. The good news is that Intel is getting much, much closer to becoming a truly powerful player in smartphones. 

It's not the processor's fault
Despite Intel's rich heritage in the computing market, it has seen extreme difficulty in penetrating the smartphone market. Some erroneously assume that there is some magic to the ARM (NASDAQ: ARMH  ) architecture that makes it more suitable than x86. The truth is that the instruction set architecture -- at least for smartphone/tablet-class processors and above -- isn't a hindrance to a power-efficient, world-class design. Intel's Silvermont processor core, for example, offers similar performance to the best ARM cores but actually does so at Iower power, thanks in no small part to Intel's manufacturing lead.

Some might make the argument that x86 necessitates an area penalty over ARM. This is true in extremely simple micro-controller designs. But once again, at the size/performance that we're talking about, the penalty is negligible. And again, since Intel has a manufacturing lead, it actually has a density advantage. All in all, the low-power CPU part of the equation has not been the problem many believed it to be. It's the rest of the system-on-chip that has traditionally been the issue.

Illustrating the point
Here is a rough representation of the highly successful Qualcomm (NASDAQ: QCOM  ) Snapdragon 801 system-on-chip that will power just about all of the next-generation "hero" devices:

(Source: Qualcomm)

If you'll notice, the SoC comes packed not only with strong CPU and GPU blocks, but the SoC comes with 21-megapixel camera support, integrated Bluetooth/Wi-Fi/GPS/4G LTE, a sensor core likely similar to Intel's sensor hub, and encode/decode hardware support for the latest video standards. In contrast, take a look at Intel's latest, greatest Moorefield system-on-chip targeted at phones:

(Source: Intel)

Intel's chip doesn't have a built-in 4G LTE modem, no Wi-Fi/Bluetooth/GPS, and no H.265 decode/encode support. The camera support tops out at 13 megapixels. While Intel's CPU and GPU implementations are right up there with those in the Qualcomm chip -- and probably lower-power, to boot -- the rest of the chip just doesn't have the right stuff for an ultra-high-end phone.

That said, it's all coming together
It's important to see that it's all coming into place. Intel's XMM 7260 LTE-Advanced modem, while not integrated onto the main SoC, looks world-class. Intel has the low-power CPU IP, it can license/develop good low-power GPU IP, and the rest of the SoC blocks continue to get better over time. While Intel isn't a world-class smartphone chip vendor today, all signs point to the company delivering on its promise that its next-generation part, called Broxton, will be leadership. If the company can actually deliver with this, then the sky's the limit -- but that's the trick, isn't it? 

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  • Report this Comment On March 07, 2014, at 10:37 AM, techy46 wrote:

    Great article. Hopefully Intel can integrate LTE and other IP into the next iteration of 14nm SoC while maintaining their dominance in classic PC and server chip space. At $20-30 per chip Intel will have to get 100-200 million, 10-20% market share, smart phones to move the needle by $2-6 billion in revenue. That will help to quell investors anxiety over the $10 billion in capex required for each of the next 2-3 tick tock cycles.

  • Report this Comment On March 07, 2014, at 4:41 PM, Bipin wrote:

    Some missing points:

    1. Captive App Engines rule the roost. Samsung, Apple, Huawei.. has one of their own..

    2. QCOM, Ericsson has communications patent portfolio...IP licensing is big.

    3. Intel is mastered Moore's law; while lagging behind "more than Moore". Next Gen Fabs need more Capex.

    4. 450mm wafers are not there yet.

    5. Too many suppliers implies margins will be under pressure (unlike in desktop/server market)

    That said, Intel has the talent, technology & tenacity as exhibited in recent products and therefore hence still has a chance.

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