In a previous column, I argued that PC processor giant Intel's (NASDAQ:INTC) cellular modem efforts were done. These comments came after the company disclosed the key technical specifications of its fourth-generation stand-alone LTE modem known as the XMM 7480.
In particular, I argued that this modem simply did not offer the performance or feature set to successfully compete with products from wireless chip specialist Qualcomm (NASDAQ:QCOM). Indeed, Intel's XMM 7480 fails to achieve parity with Qualcomm's X12 LTE modem which first arrived in the market in 2015 despite an anticipated early 2017 launch for Intel's part.
In this article, I'd like to explore the following question: Can Intel's mobile group be saved?
Identifying the problem
Before attempting to solve a problem, it's important to be able to properly define it. The problem that Intel has in the marketplace ultimately boils down to the fact that the company does not have a competitive product portfolio.
As I argued above, its latest stand-alone modems just don't offer the featureset or performance that Qualcomm's products do. In mobile system-on-chip solutions that integrate both the applications processor and a modem, Intel's portfolio simply isn't up to snuff -- to my knowledge, they have yet to field such a solution with an integrated LTE modem.
That's only the tip of the proverbial iceberg as far as integrated solutions go, but that's beyond the scope of this article.
I believe that if Intel had a truly competitive, world-class set of products (in both stand-alone modems as well as integrated solutions), it would be substantially more successful in this market than it is now. Unfortunately, building such a portfolio is much easier said than done.
Why solving this problem will be quite difficult
Intel is in an extremely difficult position. In order for Intel to merely narrow the gap with market leader Qualcomm, it needs to actually run faster than Qualcomm. At this point, it appears that Intel is running slower than the wireless giant despite what appear to be very heavy investments and a genuine desire to "win" on Intel's part.
To illustrate, Qualcomm announced its MDM9x35 (category 6 LTE modem) in late 2013 and was shipping in commercially available devices by mid-2014. Intel's own category 6 LTE modem was announced in late 2013 and was expected to ship in the first half of 2014, but actually did not begin shipping until around Sept. 2014.
Clearly, there was a gap between the two companies, but Intel at least seemed to be coming quite close for a while.
However, Qualcomm began to pull ahead once again with its MDM9x45 modem (marketed as the Snapdragon X12 modem). This device supports a maximum download speed of 600 megabits per second and a maximum upload of 150 megabits per second. This modem was announced in late 2014 and found its way into commercial devices in 2015.
Intel's XMM 7480, in contrast, supports 450 megabits per second download speeds and 150-megabit per second upload speeds -- but it won't even begin to sample to customers until the second half of 2016.
To make matters worse for Intel, Qualcomm had been sampling its follow-on to X12, known as X16, which delivers 1 gigabit per second download speeds, since late 2015 and that modem will find its way into devices later this year. And, given that Qualcomm is quite good at launching modems at an annual clip, I expect an even more advanced modem to begin sampling around the time Intel's XMM 7480 starts sampling.
Intel's not just behind -- it's being lapped.
A potential solution (but don't hold your breath)
At this point, I don't think investors ought to expect Intel to catch up to Qualcomm in high performance stand-alone modems. The chasm between the two companies' products is simply too wide and seemingly only growing wider.
Where Intel has a chance of providing value is in low-end and mid-range mobile applications processors integrated with competent, albeit not cutting edge, cellular modems. Intel would be running at a disadvantage on the modem side, but if the company is able to deliver value through other means -- in this case, I'm thinking applications processor performance/power -- then its solutions could be viable.
The problem with the potential solution above is that Intel, despite significant know-how in processor design and claims of manufacturing technology superiority (this superiority, if real and properly utilized, could make Intel's products attractive), has still not shown that it can provide value in terms of CPU/graphics performance and power.
Indeed, if anything, Intel is falling further behind in this area, too, with even low-cost players like MediaTek and Spreadtrum putting out better products on more advanced chip manufacturing technology than Intel itself.
Please explain yourself, Intel
I simply don't think Intel can provide any value to the market for mobile processors at this point. Its stand-alone modems are not competitive enough, and its application processor/modem combination chips are frighteningly bad.
As an Intel stockholder, I would like for Intel management to spend a good hour or so discussing the company's current strategy in the mobile market. In my mind, it needs to demonstrate to shareholders that it understands the tough position that it's in and offer an in-depth explanation of how it expects to overcome the odds.
Radio silence is simply unacceptable -- certainly not after the company has burned untold billions of dollars chasing this market. However, given that Intel has seemingly become less transparent with investors over time, I'm not holding my breath for much to change on this front.