Intel's Silvermont plays catch up
The tech company announced a new 22-nanometer chip designed to compete with ARM Holdings. It's not going to happen anytime soon, though.
Intel (INTC) is trying its damndest to compete in the mobile game, that much is clear. Its new Atom 22-nanometer Silvermont chipsets could help give the chip maker a boost, but that's not going to happen anytime soon.
For years, Intel, which designs the -x86 based chip, ignored the mobile computing game, allowing technology from ARM Holdings (ARMH) to win the battle. Chips based on ARM's technology now account for 95% of the market, so Intel finds itself way behind the 8-ball when it comes to mobile computing. Devices from Apple (AAPL), Google (GOOG), Samsung and others largely custom ARM-based chips, so a change from proprietary chips to Intel's new Silvermont chips isn't going to happen in 2013, or perhaps even a good chunk of 2014.
The vast majority of the apps and software that run on iPhones, iPads, Galaxy phones, and other devices all are built off ARM-based intellectual property, so to change from that technology to Silvermont is an enormous task. It will take years before Silvermont is firmly entrenched in mobile devices, and by then ARM-based chips from Apple, Samsung, Qualcomm (QCOM) and others will have next-gen chips, so Intel will continue to be stuck in the mud.
RBC Capital Markets' Doug Freedman noted that Intel is fighting a perception problem in the marketplace, especially as it pertains to power consumption.
"We are encouraged by new instructions and technology which enable improved efficiencies, however, we acknowledge that Intel is battling market skepticism in low-power vs. ARM," Freedman penned in a note. He rates Intel "buy" with a $29 price target.
The new Silvermont chipsets offer some exciting new things as it pertains to Intel, including a lower power consumption, and where Atom chips can be used, across a wide variety of devices, from servers to data centers to mobile devices. The Silvermont family of chips (Bay Trail (mobile), Merrifield (context aware and personal services), Avoton (data center), and Rangeley (networking)) also offer a higher performance than current Atom chips, so that's certainly a step in the right direction.
Mobile devices are increasingly becoming more powerful, especially as companies like Apple and Samsung make their own chips. These companies aren't going to move to Intel designs unless there's a drastic difference in power performance, Freedman noted. "While we are encouraged by the Atom roadmap, we believe the market will take a 'wait and see' approach as Intel attempts to establish more serious in-roads in ARM-dominated markets."
Intel is increasingly focusing its efforts on mobile devices, as the PC market continues (see TheStreet) to contract at a faster pace than anyone thought. Silvermont is Intel's best weapon yet, but it's not something that's going to radically change the company's fortunes in the next year or two.
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"The vast majority of the apps and software that run on iPhones, iPads, Galaxy phones, and other devices all are built off ARM-based intellectual property, so to change from that technology to Silvermont is an enormous task."
Not really true since Intel is working with Google (Android) so that Intel's Atom is optimized for Android. In fact, Lenovo has a smart phone, the K900, and tablets that already run on Clover Trail+ Intel chips. The PC's Mobile with Intel and Microsoft having the chips and software to make it a real three horse race.
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