Chip King Kong Intel (Nasdaq: INTC) sure is trying its darnedest to make up for lost time. The bellwether really dropped the ball with the mobile revolution, but it's gearing up with a vengeance to try to derail ARM Holdings (Nasdaq: ARMH) and its iron grip on the sector.
Who's coming with me?
Mobile World Congress kicked off this week in Barcelona, Spain, and Intel is expanding its mobile partner base as it ramps up its efforts with its Medfield Atom processor. At the Consumer Electronics Show in January, Intel announced hardware partnerships with Motorola Mobility and Lenovo. We can now add Chinese gadget maker ZTE to the list, along with Indian purveyor Lava.
French telecom Orange is teaming up with Intel to offer co-branded phones running on Atom chips, while French game maker Gameloft has agreed to publish games for Atom devices. The list keeps growing.
All that and a bag of chips
Ecosystem alliances are just one side of the coin. Intel has also laid out its architectural roadmap at its press event during MWC, and it's even more aggressive than its burgeoning roster of allies. Intel has outlined new members of its Atom SoC family intended to address higher and lower end markets.
This year will see Atom chips built on a 32-nanometer manufacturing process and move down to 22 nanometers in 2013. Intel will proceed to rapidly move down in 2014 to 14 nanometers, which is currently in development and notably a stark contrast from its famously successful "tick-tock" strategy. This also means that at this rate, Intel is planning on moving faster than Moore's Law.
That timeframe is also approximately when ARM players can hope to jump too. A large chunk of ARM chips are fabricated at Taiwan Semiconductor Manufacturing (NYSE: TSM), and on the last conference call, TSMC CEO Morris Chang said his company is targeting 2014 to begin ramping up 14-nanometer production.
Not worried ... yet
All of these developments suggest that Intel has a real shot at cracking into ARM turf. However, the real test will be time. Several other Fool analysts and I recently spoke with ARM chipmaker NVIDIA's (Nasdaq: NVDA) investor relations, and the company's representatives explained why they weren't concerned with Medfield in the near-term.
OEMs are typically looking at hardware margins, and going with ARM chips allows more flexibility and choice, which helps keep costs down as rival ARM chipmakers compete for the win. Intel has always commanded premium pricing and margins on its chips, and it will have a dilemma as it makes its mobile push. It can take a hit on margins to offer price points that are competitive with ARM offerings, or it can try to maintain margins but risk losing out to ARM chips because of cost differentials.
If Intel is going to make a dent, it will definitely take time. For now, NVIDIA is far more concerned with competing with Qualcomm (Nasdaq: QCOM), as the former just won over one of the latter's main flames. The two companies will continue escalating their competition through integration, but Intel also has integration in mind.
Part of a part
Intel's push will be largely within the confines of Google Android, which is open to multiple microprocessor architectures. Smaller chip designer MIPS Technologies also wants in on the Android party by coming in from the ultra-low end, but its cheap devices are doomed.
Intel will also be a part of powering Microsoft Windows 8, which supports both x86 and ARM chips. Although judging by recent mobile market-share figures for Microsoft, Android is the real key.
Apple iOS is an all-ARM affair, and I find it unlikely that Intel could sway Cupertino's mobile mind, since Apple has already spent almost half a billion dollars acquiring small chip shops P.A. Semi and Intrinsity for its own custom-designed ARM-based A-family of processors. With as much as the Mac maker loves integrated solutions designed in-house, it would need a pretty compelling reason to make such a major shift.
A shareholder's confession
As an ARM shareholder, I'm the first to confess that I'm legitimately concerned about Intel in the mobile-processor arena. Intel has the resources to wage a drawn-out war, but it's also going against an entire consortium of capable companies that will be playing solid defense. Even longtime x86-chipmaker and Intel rival Advanced Micro Devices may be thinking about enlisting in the ARMy.
Intel is starting to form its own alliances, and it has its own unique strengths through vertical integration and manufacturing prowess. This is going to be a long and bloody battle.
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