Intel (NASDAQ:INTC) has partnered with Rockchip, a company few know about. The partnership is the result of smartphone and tablet growth that's shifting into markets where selling prices are much lower than in most developed countries. For example, a lot of inexpensive tablets and smartphones are selling into Africa, India, and China. The shift has put Intel in a tough spot. While it'd like to capture the growth in this market, margins are squeezed and the price competition is immense.
Yet at the same time, Intel wants to build support around Android tablets using its x86 architecture. To do so, it needs to ensure that its processors are in the cheaper Android tablets that are still seeing explosive sales growth.
The partnership with Rockchip is Intel's way of approaching the market. Rockchip will sell a chip built on Intel's architecture, at very low price levels. Intel will probably make little money off the deal, but it gets to extend its reach into the Android tablet market currently dominated by chips based on ARM Holdings (NASDAQ:ARMH) designs. The plan dovetails with Intel's own plans to sell its chips into 40 million tablets this year.
In the following video, Motley Fool tech analyst Eric Bleeker and Max Macaluso discuss Intel's attempt to get even a small slice of the smartphone and tablet market, especially in emerging markets, with partnerships like this new one with Rockchip.
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Eric Bleeker, CFA, has no position in any stocks mentioned. Max Macaluso, Ph.D., shares of Apple. The Motley Fool recommends and owns shares of Amazon.com, Apple, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.