Intel Corporation’s New Chip Could Be a Game Changer

Intel's upcoming Cherry Trail processor could prove a game changer as it remedies one of the company's remaining weaknesses.

Jul 7, 2014 at 12:40PM

If there's one thing that Intel (NASDAQ:INTC) is good at, it's designing high-performance, power-efficient processors. However, in today's world, being great at processor design is just one part of the overall system-on-chip equation.

One of Intel's deficiencies relative to most of the ARM camp, as well as to longtime PC chip rival Advanced Micro Devices (NASDAQ:AMD), has been in graphics. With Intel's next chip -- code named Cherry Trail -- the graphics capabilities of the company's mobile processors should dramatically change for the better.

Bay Trail's graphics performance and power were disappointing
Intel's Bay Trail architecture -- which was used in the company's low-cost PC chips and tablet processors -- featured a low-power variant of the company's Gen. 7 graphics architecture. The graphics performance of this product wasn't really bad, but normalized for manufacturing process, die area, and power, it was not very competitive.

To put this into perspective, the Atom Z3745 (Bay Trail for tablets) offers graphics performance that is roughly on par with the Qualcomm (NASDAQ:QCOM) Snapdragon 600 found in the 2013 Nexus 7, fabricated on TSMC's 28 LP process (this is TSMC's low-performance 28-nanometer process). In contrast, Bay Trail-T is fabricated on Intel's 22-nanometer high-K/metal gate process + FinFET process (which is significantly ahead of any competing manufacturing process in terms of transistor performance and power).

Clearly Intel can do a lot better with its graphics architecture.

Cherry Trail looks like a significant improvement
Part of the problem with Bay Trail's graphics performance is that it was built on a fairly dated graphics design. The Gen. 7 architecture first appeared in Intel's early 2012 PC chip lineup; while it was a substantial improvement over the Gen. 6 architecture found in the 2011 PC processors, there was room for improvement.

The Gen. 8 graphics processor -- set to debut in Intel's PC and tablet processors later this year and early next year -- should be a substantial improvement over the prior architecture. In fact, an Intel engineer remarked that the changes from Gen. 7 to Gen. 8 brought some of the largest changes during his tenure at the chipmaker.

On top of that, while Bay Trail only packed four of these graphics cores, the next-generation Cherry Trail processor -- which will find a home in tablets and low cost/low power PCs -- packs up to 16 of these redesigned graphics core, according to VR-Zone.

This helps Intel across the board
This will help Intel compete against the likes of Qualcomm in the tablet processor space, and it also improves Intel's competitive position in PCs.

Advanced Micro Devices has typically had superior graphics architectures to what Intel provides. For example, if you compare Intel's Bay Trail-M to AMD's Kabini or Beema, you'll see that Intel's graphics performance trails significantly. The comparison looks better if you normalize for power consumption, but given that Intel is at least a generation ahead of AMD on raw transistor performance, this really speaks to the disadvantage that Intel has here.

However, Cherry Trail brings a fundamentally new graphics architecture, a move to a new 14-nanometer manufacturing technology, and potentially a higher die area allocation to graphics over Bay Trail. All of these should combine to give Intel a good competitive positioning in tablets and low-cost notebooks.

Foolish takeaway
For Intel investors, it will be exciting to see how well Cherry Trail fares for tablets and low-cost PCs. Bay Trail took meaningful share in low-cost PCs even with the aforementioned graphics deficiencies. Cherry Trail -- which may actually have leadership graphics performance in its target market segments -- could extend that momentum. 

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Ashraf Eassa owns shares of Intel  and ARM Holdings. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

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