- Intel has announced that it will discontinue further investments into its leading mobile chip lines.
- Intel will shift its resources to more profitable segments such as Data Center, IoT and 5G.
- Though likely to leave a giant hole in the company's mobile roadmap, the long-term implications are positive for the company.
It's now official: Intel Corporation (NSDQ:INTC) has taken the first major step to exit the mobile and tablet markets. As part of the company's ongoing efforts to pare back its still-massive mobile losses, Intel plans to stop making any further investments into its two main mobile architectures SoFIA and Broxton. SoFIA is a mobile SoC line that pairs an Atom processor and a baseband modem and mainly targets low-end Android phones and tablets. On the other hand, Broxton is an Atom-based processor that targets the high-end smartphone and tablet market. An Intel spokeswoman has said that funds previously allocated to SoFIA/Broxton were going to
"products that deliver higher returns and advance our strategy."
Intel has lately been making pretty dramatic product and roadmap changes under Murthy Renduchintala, new president, Client and Internet of Things (IoT) Businesses and Systems Architecture Group. About a month ago, Intel announced a dramatic shift from its traditional tick-tock chip manufacturing cycle, following which it intends to be rolling out three CPU platforms for each new process it builds.
"We expect to lengthen the amount of time we will utilize our 14 [nanometer] and out next-generation 10 [nanometer] process technologies, further optimizing out products and process technologies while meeting the yearly market cadence for product introductions,"
Intel appears to have made the move ostensibly in a bid to cut down on R&D costs as well as infrastructure capex. But the move could also potentially lead to Intel losing its traditional manufacturing lead over Samsung Electronics (OTC:SSNLF), Taiwan Semiconductor (NYSE:TSM) and GlobalFoundries.
Meanwhile, Intel plans to pitch tablet and low-end OEMs on its Celeron and Pentium chips that are manufactured on its new Apollo platform. Intel has, however, indicated that it will continue partnering with Rockchip, a Chinese chipmaker with whom Intel has jointly been developing SoFIA SoCs.
Intel's new mobile move is likely to leave a giant hole in its mobile roadmap. A new Broxton line that uses Intel's next-gen Goldmont CPU core and manufactured using 14nm process was slated for launch in 2015 but was delayed as was new SoFIA SoCs. Intel's mobile conundrum is hardly surprising seeing that smartphone giants Apple (NSDQ:AAPL) and Samsung have been relying heavily on their own app processors. Meanwhile, Intel has also been facing tough competition from mobile players Qualcomm (NSDQ:QCOM) and MediaTek. Intel does not directly break out smartphone chip sales but said tablet chip sales were down a massive 44% during the last quarter. IDC has predicted that the smartphone market will continue growing over the next three years, but only in single-digits as opposed to double-digits growth a couple of years back.
Worldwide Smartphone Forecast
|Region||2015* Shipment Volumes||2015* Market Share||2015* YoY Growth||2019* Shipment Volumes||2019* Market Share||2019* YoY Growth||5 year CAGR|
Source: IDC Worldwide Quarterly Mobile Phone Tracker, December 2, 2015.
Intel is gradually moving from an era where PCs drive most of its top line to relying more on the Data Center group and IoT. Its latest move means that Intel's mobile sales could decline to a trickle in just two years or perhaps less.
On a brighter note, the move will free up resources to be used to advance Intel's foray into Date Centers, IoT and 5G. 5G will provide 100 times faster data throughput than 4G, and will move beyond mobile devices and will enable connectivity for smart home devices, wearables, robots, drones and industrial IoT. This is a bigger market that Intel intends to tap into as evidenced by the company's January acquisition of drone-maker Ascending Technology. The first 5G deployments are expected to hit the markets in 2020.