Can Intel Corporation’s Ambitious 2015 Smartphone Plans Compete With Qualcomm?

Earlier, I took at look at what went wrong with Intel's (NASDAQ: INTC  ) smartphone plans during 2014. But as investors, it's important to understand but not dwell on the past. As Intel looks to take on mobile juggernaut Qualcomm (NASDAQ: QCOM  ) , it's worth taking a look at what Intel has in the pipeline for 2015 and how that will stack up with what Qualcomm has in store.

The apps processor roadmap
At Intel's 2013 Investor Meeting, management presented the following plan for 2015:

Source: Intel

You'll notice that at the top, Intel plans to release a product codenamed Broxton for the high end of both smartphones and tablets.

At the low end, Intel is introducing a product called SoFIA ("Smart or Feature Phone with Intel Architecture"). The details about this product are a bit more nebulous, but we do know that the 3G version will be a dual-core Silvermont core design and that the LTE version will sport four cores and a feature-reduced variant of the XMM 7260 (based on Intel statements at the 2013 Investor Meeting).

Both of these product families will be important in driving Intel's smartphone strategy, with SoFIA likely to be the more important one in the near-to-medium term.

What's the strategy?
The strategy with Broxton appears to be to design a no holds barred high-end smartphone and tablet applications processor. This should serve Intel well as it pushes into the Android and Windows tablet markets, and could help Intel win a few sockets at the likes of LG, HTC, and perhaps a few of the lesser known brands attempting to aim at the high end. The opportunity for Broxton in high-end phones probably isn't giant -- and it is dependent on Intel executing on the modem/communications side of things -- but long term, Intel is going to want to be a credible player here. 

The more interesting play here is with SoFIA. In 2015, SoFIA will be built on TSMC's 28-nanometer manufacturing technology. This is likely due to the fact that the modem IP that Infineon Wireless -- the team that Intel acquired to build its modems -- had already been working on these designs on TSMC's process technology.

The good news is that this will allow Intel to be able to compete with a fully integrated part, but the bad news is that this strips Intel of its manufacturing lead until 2016. But the more important point is that the low end of the smartphone market -- where SoFIA and its follow-ons are targeted to -- isn't dominated by Samsung and Apple. The market is more diverse, and Intel can (potentially) sell to a broad range of customers.

Will it work?
Only time will tell if this strategy will work, but if Intel can actually gain traction with the 28-nanometer SoFIA parts, then once it rolls out follow-on low-cost designs on 14-nanometer in Q1 2016, Intel should have a fairly sizable performance/power/cost edge over the rest of the competition. Assuming that Intel integrates competitive connectivity and cellular IP, Intel should be able to gain reasonable traction in the low-end of the smartphone market at good margins.

Where's Qualcomm in all of this?
Intel doesn't exist in a vacuum and its results in phones depends pretty heavily on the competitive landscape. Qualcomm's product lineup for 2015 seems to be the following:

  • Snapdragon 410-low cost, 28-nanometer LP product based on the ARM (NASDAQ: ARMH  ) Cortex A53. Integrated MDM9x25 modem and 1-stream 802.11ac Wi-Fi. (Q3 2014 device availability)
  • Snapdragon 610/615 -- mid-range, 28-nanometer LP product based on 4-8 ARM Cortex A53 cores. Upgraded graphics over Snapdragon 410. Same modem/Wi-Fi as Snapdragon 410. (Q4 2014 device availability)
  • Snapdragon 808 -- high end 20-nanometer part with 2 ARM Cortex A57 cores and 4 ARM Cortex A53 in big.LITTLE configuration. Adreno 418 graphics. Integrated MDM9x35 LTE-Advanced modem (no Wi-Fi). (1H 2015 device availability)
  • Snapdragon 810 -- high end 20-nanometer part with 4 ARM Cortex A57 cores, 4 ARM Cortex A53 cores in big.LITTLE configuration. Adreno 430 graphics. Integrated MDM9x35 LTE-Advanced modem. (1H 2015 device availability)

The SoFIA LTE part, depending on its graphics capabilities (this is a big unknown), could either be very competitive with the Snapdragon 610/615 or the Snapdragon 410. Intel doesn't really have an answer for the Snapdragon 808 and 810 during the first half of 2015 since Broxton is a second half of 2015 event.

The bottom line is this: Intel seems as though it will be competitive with the lower end of Qualcomm's product stack in terms of performance and timing. The high end of the smartphone market is a bit trickier to call as it is unclear when Qualcomm will refresh the 808/810 products.

Foolish bottom line
The good news is that Intel should finally have credible, timely solutions for the low end of the smartphone market -- Intel's biggest opportunity in phones given current market dynamics. It will need to address this market with products built at external chip manufacturers, but if it can use 2015 to build credibility with the handset vendors, then this paves the way nicely for the higher margin 2016 parts built in Intel's manufacturing plants.

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Read/Post Comments (6) | Recommend This Article (2)

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 July 17, 2014, at 12:01 PM, MayTepper wrote:

    Roth Capital Raises Intel Price Target To $38 Following Strong 2Q14 Results http://bit.ly/1pesvoh

  • Report this Comment On July 17, 2014, at 12:52 PM, raghu78 wrote:

    ashraf

    you have such unabashed faith that broxton 14nm and sofia 14nm will launch in 2015 even amidst the product delays with Broadwell notebook and desktop to H2 2015.

    http://www.fool.com/investing/general/2014/07/10/intels-broa...

    Cherrytrail is pushed to H1 2015. Intel has Broadwell Xeons to launch in H2 2015. The way things are going Skylake, Broxton will be lucky to make it in Q4 2015 and worst case will get pushed to Q2 2016.

    Either way Broxton faces off against Apple A9 and Qualcomm FINFET SOC chips manufactured at Samsung. TSMC conceded that Samsung will have the FINFET marketshare lead in 2015. Its now pretty much confirmed that Apple and Qualcomm have gone to Samsung/GF.

    http://news.yahoo.com/taiwans-tsmc-likely-lose-apple-qualcom...

  • Report this Comment On July 17, 2014, at 5:35 PM, cdma1engineer wrote:

    Intel keeps announcing chip after chip after chip to win the market, yet their market share keeps going down. When will they build a chip which actually meets the demands of the wireless market and do those things which it takes to actually win sockets and designs?

    If they are losing $1B per quarter on trying to win the market, how much longer will the board believe the Intel marketing people in their insight? At what point do they make a decision to shut this down due to no design wins like Broadcom?

    It always seems like you tout the NEXT chip as the one which will turn the tide, but what about THIS chip? $51M in revenue from this group is pretty poor results from a group that has said they would have THE winning chip in the next 3 months about every other quarter for two years.

    Until they fundamentally change the entire thinking and leadership of this division, they will go nowhere. Decisions are not made on the engineering excellence, it seems to be made on a marketing goal and then engineers are asked to build that.

    Perhaps you will be right 1 time out of 10 and this next chip will be THE chip to sell into everything, but so far their track record of announcing this has been less than dismal.

  • Report this Comment On July 17, 2014, at 6:01 PM, cdma1engineer wrote:

    OH, and where is qualcomm in all of this?

    In all those smartphones SELLING in the market.....

  • Report this Comment On July 17, 2014, at 9:13 PM, SemiWiki wrote:

    According to BK on the Q2 CC:

    "We also expect the first 14-nanometer Broadwell Core M processor-based systems including fanless two-in-ones will be on shelves for the holiday selling season, followed by broader OEM availability in the first half of 2015."

    What does this really mean?

    BK held up a Broadwell based laptop IDF last September and said a similar thing, right?

  • Report this Comment On July 19, 2014, at 9:29 AM, JimBo11 wrote:

    Ashraf Eassa of Motley Fool: Intel will have its LTE advanced XMM 7260 modem ready by the fall of 2014 ( Sept. 2014 time frame?), Intel president Rennee James said in June 2014, 7260 was sampling to their customers worldwide. Although it is not integrated with a CPU, but Intel will give contra money to push this 7260 into the market. As Intel executives announced recently, Samsung and the Chinese mobile companies will use it. It will give Intel a presence in the mobile market, but not in revenue real term. Intel actually is not doing too good in the technology sense now. Its technology lead falls into about 4-6 months ahead of its competitors, compared with a couple years ago; its lead was more than a year. Not only that, the competition field is much larger now. It is not just Qcomm, TSMC, Samsung, Nvidia, Marvell, MediaTek, now there are some other Chinese and Taiwanese IC designing firms are popping up like wild fires; Yet, Intel is going to spend all its cash reserve to buy back stocks, while it is expecting to earn $10B/year to fund these payout. PC and server processor revenue/profit will not be able to fund this extravagance in buy back to pop up the stock price forever. Intel executives feel good and get a bigger bonus now, but this fortune is not going last much longer if Intel keeps this direction, it will soon become a second tier technology company if it keeps on spending on the stock but not research and technology investment; it is not good news to Intel or to America technology. Remember, it is not just Intel, the US government agencies spend $120B a year on research in this computer hardware and software development. If Intel loses, US will lose along with it. If you don’t believe it, just look at IBM, IBM’s technology and manufacturing have decimated to the point that it is just a “service” company. I.e., it is a helper, not a leader. All of that was due to IBM executives’ decision to make money on service, not to build hardware or to invest in the hard to make money field. If there is no pain, there will be no gain!

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