Here's Why Intel and AMD Can't Beat Qualcomm

The Street has been eagerly awaiting the launch of Intel's  (NASDAQ: INTC  ) Cherry Trail and Advanced Micro Devices'  (NASDAQ: AMD  ) Beema and Mullins processors. With their architectural improvements and reported performance gains, competition in the mobile chip industry may very well intensify. But even so, there is reason to believe that the duo won't be able to dislodge Qualcomm  (NASDAQ: QCOM  ) from its pole position in the high-performance mobile chip segment anytime soon. 

Power of ARM
Investors should note that the Android platform runs on almost any CPU in the world. But the ARM (NASDAQ: ARMH  ) architecture is reputed for its speedy performance in low-voltage environments, which is why hardware manufacturers and software developers tailor their offerings for ARM – the core architecture of Qualcomm's Snapdragon chips.

This essentially means that ARM-based Android applications need to be recompiled and redesigned for their performance to be similar on AMD and Intel-based Android devices. But, since the ARM architecture powers about 90% of the smartphones, there isn't much incentive for software developers to customize their software applications for Intel and AMD platforms. 

The catch-22 situation creates an entry barrier in the high-performance Android-based chip market, and makes it hard for x86-based chips -- like Intel's Cherry Trail and AMD's Beema and Mullins -- to establish a foothold in the industry. More important, it protects Qualcomm's established market position. 

Emulating Android
To compete with Qualcomm, Intel bundles its x86-based Bay Trail chips with a binary translator. The emulator recompiles Android-based apps, and converts the native ARM code to native x86 code – something that Intel chips can run.

The chipmaker claims that the translator can work without utilizing a substantial amount of system resources. Research conducted by ARM, however, suggests otherwise. 

Source: ARM, The Register

Rod Watt of ARM recently concluded that binary translation drains the CPU and battery resources by as much as 40% and 90%, respectively. This inefficient utilization of system resources can prove detrimental to Intel's growth in the cutthroat, ARM-based, mobile chip industry. 

AMD doesn't support Android applications on its x86-based Beema and Mullins chips either. The chipmaker has tied up with BlueStacks, to provide its users a virtualized Android environment on AMD-based Windows PCs. Available for $39.95, the emulator is designed primarily for Android software development – thus limiting AMD's growth potential in the Android-based chip segment as well. 

Culmination of x86 and ARM?
Intel hasn't announced any plans to adopt the ARM architecture for its upcoming mobile chips. The chipmaker believes that its binary translator can run about 90% of the total Android apps available in the Google Play Store. But given the system requirements of the emulator, merely being able to run those apps won't necessarily translate into a flawless user experience. For this reason, investors shouldn't expect much from Intel in the Android-based mobile computing space. 

AMD, on the other hand, has a rather interesting roadmap. The chipmaker intends to develop systems-on-chip simultaneously based on ARM and x86 platforms. Codenamed SkyBridge, these chips are set to be unveiled in 2015. Without delving into its technical or designing aspects, the chipmaker stated that its ARM core would run Android.

Foolish final thoughts
The tablet and smartphone industries are slowing down. Amid this macroeconomic scenario, Intel's decision to go on its own can limit its growth potential. AMD, however, presents an optimistic outlook.

Its Beema and Mullins chips may not prove enough to capture substantial market share from ARM-based Qualcomm offerings over the coming year, but its SkyBridge chips -- marking a shift in AMD's product direction -- might contribute in establishing its foothold in the Android-based chip industry over the longer run.

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Comments from our Foolish Readers

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  • Report this Comment On May 12, 2014, at 12:36 PM, EngineerPaul wrote:

    It would be interested to see a follow up on the article with test information provided by a source other than ARM. I am sure that they would be above-board, but they do have an incentive to find problems rather than strengths in the x86 Android implementation. Will the benchmarks that they highlight correspond to lower real world performance? It is interesting to note that, if I read their slide correctly, the 15% power disadvantage on Epic Citadel appears to have a corresponding increase in FPS. That could actually be a win for x86. 31 FPS is pretty marginal. Even 45 is merely okay, but gamers will probably take it over 31, even I the battery doesn't last as long.

  • Report this Comment On May 12, 2014, at 1:02 PM, bugsy1339 wrote:

    "Amid this macroeconomic scenario, Intel's decision to go on its own can limit its growth potential. AMD, however, presents an optimistic outlook."

    Agreed - Im puzzled why Intel would not just buy Nvidia who is already using some ARM tech and Intel would get their own Graphics business too.

    I think the Intel ship is moving slow as they are stumbling trying to compete on a level playing field for the first time in a long time.

  • Report this Comment On May 12, 2014, at 1:48 PM, SSchlesinger wrote:

    Many years ago people love Windows XP. If you found a webcam on the clearance rack at WalMart it would come with a small disc and a piece of paper roughly half the size of a sheet of toilet paper that said that this was the Windows XP driver on the CD.

    When Microsoft came out with Windows Vista all of these odd duck pieces of hardware were around and it didn't work on Windows Vista. The list of hardware incompatibility was a mile long. But Microsoft worked through it, and all the driver fixes are what you now find in Windows 7 and Windows 8.

    In a nutshell a company that isn't afraid to spend a billion dollars on contra revenue isn't afraid to invest millions to help pay to recompile code on the most popular apps. What you will see with Intel is 35% of the apps in the market that make up 90% of app sales in the market will be recompiled to run on Intel based processors. If this issue you brought up is the only selling point ARM has to stay relevant then get out out now!

  • Report this Comment On May 12, 2014, at 3:29 PM, will1946 wrote:

    I think that Intel has a lot more in the fire than just mobile, and as the author notes, mobile also is beginning to level off. There is however no denying that Intel considers mobile important, nor that it is having some difficulty both in producing chips that will integrate well with mobile and also consume less energy.

    Qualcom might be well-advised to branch out a bit too.

    Interesting article.

  • Report this Comment On May 12, 2014, at 11:32 PM, l0g1c wrote:

    The author of this piece appears to be completely clueless and ignorant with regards to semiconductor chip technology.

    Intel's silvermont core beats virtually every ARM CPU in the market in terms of perf/watt. Cherry Trail will further widen the perf/watt gap between ARM and Intel.

    Intel's mobile problems has little to do with ARM and has a lot to do with lack of a leading mobile solution, i.e. a well-integrated soc.

    Intel faces the same barrier that has prevented Nvidia (which uses ARM) from having a significant presence in the mobile market, the same barrier that forced TI (which used ARM) to drop out of the mobile race and the same barrier that will prevent AMD from gaining any kind of significant share in the mobile market.

    Qualcomm dominates the mobile market because they have the best soc (which has cpu, gpu, cellular baseband, gps, wi-fi, sensor hub, bluetooth, etc. all on the same die), not the best CPU or even GPU.

    If Intel dropped x86 in favor of ARM today, it wouldn't help its chances of penetrating the mobile market, it would probably hurt them. And the idea that AMD, which lacks any kind of in-house wireless or cellular IPs would be able to gain a foothold in the mobile market is nothing short of laughable.

  • Report this Comment On May 13, 2014, at 6:33 AM, rav55 wrote:

    "Intel's silvermont core beats virtually every ARM CPU in the market in terms of perf/watt. Cherry Trail will further widen the perf/watt gap between ARM and Intel."

    That maybe so, however one can not compare ARM to x86 so easily. For instance Intel gives MASSIVE REBATES so much that Intel's Communication and Mobile Group has lost $6 BILLION to date sinec 2012 based on about $1.7 in toal sales since 2012. INtel is also on track to lose another $3 BILLION trying to compete with Samsung and Qualcomm by the end of 2014.

    "In 2013, Intel's mobile chip division lost a hefty $3.15 billion, after posting an operating loss of $1.78 billion in 2012. In the first quarter of 2014 alone, the Mobile and Communications Group saw a $929 million operating loss on a meager $156 million in revenue, according to new financial results issued today by the company."

    Intel also does NOT enjoy a power advantage over Qualcomm. Just because Intel says that the CPU reduces power doesn;t mean that it actually does. Infact running ANY APP sucks up power.

    Furthermore Ssamsung is about to release 14nm fin-fet in it's silicon offerings and poof there goes more Intel SHAREHOLDER VALUE as the ONLY edge Intel enjoyed was it's sole occupancy of the <20 nm litho.

    Intel just can not compete in the Mobile and Tablet market environment. And trying to is sucking up shareholder value.

    Intle reported this last quarter $0.38 per share based on $1.9 BILLION in revenue. If Intel did not suffer the loses from the Communication and Telecom Group then it would have reported about $0.45 per share based on $2.8 BILLION in revenue and it's stock would be rocketing upward due to short covering.

    Intel just can not afford to play in Qualcomm's sand box. It is absolutely insane that they are and heads should role.

  • Report this Comment On May 13, 2014, at 6:55 AM, rav55 wrote:

    @ bugsy1339

    The Justice Department would never allow Intel to purchase nVidia for the same reason that they shot down the AT&T acquisition of T-Mobile, despite AT&T having committed billions to the sale regardless if it closed.

    Justice is very pro-consumer and pro-competitive. Justice would never allow that much consolidation of the x86 and x86 graphics market to center on Intel.

    Besides Intel doesn't want nVidia as soon Intel will be trying to go it alone in the SOC IGP market without nVidia with Intel HD. The Intel nVidia cross licensing agreement is up in 2016 and is likely not going to be renewed. Bye Bye nVidia.

    Intel wants it's own version of a discrete GPU and will likely drop support of PCIe sometime after 2016. Without PCIe nVidia has NO ACCESS to the Intel bus neither will AMD for that matter but not many Intel oems populate mobos with Radeon now anyway. Discrete graphics is also going the way of the Southbridge and Northbridge chipset. In all but the most most strenuous work station work flows, a discrete graphics card will likely not be necessary within 3 years.

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Piyush Arora

Piyush, an Electronics Engineer with an MBA in Finance, is continuously looking for discrepancies in market pricing. He likes to research tech stocks that incur minimal risks and offer healthy returns, over the short-medium term period.

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