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Here's Why Intel Can't Outperform Qualcomm In the Mobile Chip Segment

Intel  (NASDAQ: INTC  ) is the long-standing leader in the x86 and x64 high-performance computing space, but it is yet to grab a substantial share in the low-power mobile chip segment. Its upcoming Cherry Trail chips -- reportedly using a 14nm process -- may compete fiercely with Qualcomm's  (NASDAQ: QCOM  ) in terms of raw computing performance. But even so, there is reason to believe that Intel won't be able to establish itself in the Android-based mobile chip industry anytime soon. 

What's lacking?
It's worth noting that Intel manufactures some of the most advanced computing chips around the globe. Its x86 chips, for instance, are able to allocate priority levels to computing threads on a hardware level -- something that's lacking in ARM (NASDAQ: ARMH  ) chips. Intel chips are also able to define counting loops on a hardware level, as opposed to the software-defined counting in ARM chips.

Features like these are an essential part of hardware-based logic programming and speed up the overall computing process, but they also require transistors to execute tasks. This is one of the reasons why Intel's x86-based processors, as opposed to ARM's latest, have almost three times as many transistors.

But these feature-driving transistors also require electricity to operate, amplifying the overall required power envelope of Intel's x86-based chips. ARM chips, on the other hand, offer no such hardware features and are able to churn similar computing performance while consuming less power.

This is one of the primary reasons why smartphone and tablet manufacturers currently prefer ARM-based Qualcomm chips to Intel's low-power Bay Trail. But that's not all.

Owing to the architectural differences, software developers are required to recode and recompile their ARM-based code for Intel processors to run. But since ARM-based chips are currently equipped in about 90% of the smartphones, there isn't much incentive for software developers to perform such tedious tasks -- another factor working against Intel. 

Losing its lead
In order to compete fiercely with ARM-based Qualcomm chips, Intel has announced the development of its upcoming 14nm low-voltage Cherry Trail chips -- an upgrade from the 22nm Bay Trail. As illustrated by Intel Broadwell's benchmarks, shrinking the die size -- by shifting from 22nm to 14nm process -- lowers the equivalent chip's power consumption by up to 30%.

But Qualcomm isn't sitting idle. The chipmaker -- currently using a 28nm fabrication process -- intends to mass-manufacture speedy chips using a 20nm process by the first half of 2015, the time of Cherry Trail's release. Qualcomm might consider moving to a 16nm FinFET process by 2016, with chips manufactured by Taiwan Semiconductor

As we have seen in the case of NAND modules, chip-fabrication processes can't be shrunk endlessly. Close proximity of nodes leads to electromagnetic interference, which in turn, increases the cell degradation rate and reduces chip reliability. For this reason, Intel may find it hard to go below 14nm – possibly enabling ARM-based Qualcomm chips to catch up in terms of raw computing performance. 

This means that even if Intel is able to port similar power-saving gains into its mobile Cherry Trail processors, it may not be able to outperform Qualcomm's latest in terms of raw computing performance.

Ray of hope
The only way Intel can establish a foothold in the smartphone and tablet industry is by competing in the downmarket space at first. Allwinner and MediaTek are thriving in the segment due to the absence of reliable and reputed high-performance competitors. 

Intel can focus on capturing a substantial market share in the segment, thereby motivating software developers to compile their apps for its x86-based chips. Then it may consider climbing up the ranks to compete with the high-performance stalwarts like Qualcomm.

Until that happens, Intel may find it very difficult to dislodge Qualcomm from its pole position in the high-performance mobile chip segment. 

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Read/Post Comments (3) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 29, 2014, at 2:55 PM, will1946 wrote:

    You wrote an article with the same theme, Intel can't beat Arm, a month or so ago. Why do you not change themes? You are long Amd, right? Write something on it.

  • Report this Comment On May 29, 2014, at 4:34 PM, EngineerPaul wrote:

    I think you may be mixing together Intel's desk top chips and tablet chips. The gap in transistor count and TDP that you describe seems to be more applicable to a PC to tablet chip comparison than comparing INTC and QCOM tablet chips. The BayTrail line looks reasonably competitive. There have been many solid articles about why it isn't doing better, but none of them focus on TDP or transistor count.

  • Report this Comment On May 29, 2014, at 6:50 PM, guest1 wrote:

    I wouldn't count on QCOM 20 nm being delivered on time. The makers of the fab equipment have already stated as recently as the end of April this year that fabs such as TSMC are having yield issues. It wouldn't surprise me if AAPL's A8 is on 28nm since 20nm is not yielding. Any 20nm chips that are ready would most like all end up in AAPL's camp. But hey whatever makes the INTC permabulls happy.

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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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