Intel (NASDAQ: INTC ) and Qualcomm (NASDAQ: QCOM ) have been fiercely competing in the mobile segment in recent years. The growing number of competitive downmarket processors and slowing growth rate of tablet shipments, however, has limited their growth.
In 2014, there is reason to believe that the upcoming offerings from Advanced Micro Devices (NASDAQ: AMD ) will further intensify competition and make it even harder for Intel and Qualcomm to grow.
Intel's current-generation 22nm Bay Trail system-on-chip range was unveiled in September last year. In terms of raw processing power, Intel chips outperformed Qualcomm's latest offerings and were at par with AMD's 28nm Kabini processors. This was a big achievement for AMD, as it was able to match Intel's performance using a relatively older fabrication process.
At this year's Consumer Electronics Show, AMD teased us with its upcoming Beema and Mullins processor lineup targeted at mobile devices like ultra-thin laptops, tablets and 2-in-1s. Although the chips still use a 28nm process, architectural improvements boost its performance significantly. Compared to Kabini processors, the iGPU and CPU performance of AMD's new processors have improved substantially -- up 20% and 35%, respectively.
Speaking about the performance gains, the general manager of AMD noted:
What you will see is that on graphics performance, it is substantially better. We're talking about 250% better than the comparable Bay Trail products. What is different is on the compute performance, where we had traditionally been not as strong, we see significant performance improvements.
These claims are corroborated by actual benchmarks. As illustrated in the table above, AMD's Beema and Mullins processors clearly outperform Intel's Bay Trail. What's interesting is that AMD's performance gains follow a relatively older 28nm process, as opposed to Intel's latest 22nm.
In the overall mobile processor industry, Qualcomm leads the pack with a gigantic 64% market share. Intel comes in third, with an 8% market share.
But low-end offerings from MediaTek and Allwinner have been fiercely competing with Intel and Qualcomm in the downmarket industry. In fact, Allwinner recently became the second largest downmarket processor manufacturer, while MediaTek retains its top spot. Qualcomm and Intel are currently placed at third and sixth in that industry, respectively.
Heading into 2014, IDC estimates that sales of sub-$150 tablets will surge by 36% this year and further strengthen the foothold of these low-end processor manufacturers. In this case, AMD has a tremendous growth opportunity.
Historically speaking, AMD has priced its products competitively. If the company offers Beema and Mullins processors at aggressive price points, downmarket tablet manufacturers might feel compelled to use AMD processors. This will open up a whole new growth avenue for Advanced Micro Devices.
Words of caution
While AMD presents an optimistic outlook, there are a few factors that can limit its growth:
- We have seen that AMD's Mullins and Beema processors outperform Intel's Bay Trail. But for its rapid adoption, AMD will have to price its offerings competitively.
- AMD will also have to move its product rapidly, as Intel's Cherry Trail is slated for release in the second half of 2014. The latter will reportedly use 14nm process nodes.
- Investors should also note that AMD hasn't yet announced whether its low-power APUs will support Android, which commands a 78.1% global market share. In case AMD doesn't add support for Android, its growth will be fairly limited; Intel's Bay Trail and Qualcomm's Snapdragon support Android.
Investors should keep a close eye on key metrics -- like Beema and Mullins release dates, their pricing patterns, supported platforms, and technological improvements in Intel's Cherry Trail processors -- and expose their portfolio accordingly.
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