Intel has bled $7 billion while heavily subsidizing cheap x86 Atom Android tablets

[astilo]

Over the last two years, Intel's mobile chip division has lost $7 billion while heavily subsidizing the manufacturing costs of Android Atom tablet makers. It now plans to phase out those generous incentives, which will make it more expensive for iPad competitors to dump cheap tablets into the market.

Intel reported mobile chip losses of $3 billion in 2013. Those losses increased this year; Morgan Stanley analyst Joseph Moore recently estimated that Intel's Mobile and Communications Group will lose $4 billion in 2014. That's an astounding $7 billion lost across two years, three years after Intel announced its partnership with Google to support Android.

"While we do expect that [intel=] phasing out tablet subsidies over the course of 2015 will cause modest reduction in losses, it could also blunt the company's momentum in tablets significantly," Moore wrote. "Eliminating these losses would require either massive revenue gains, or massive expense cuts, and we don't see a clear scenario for either of them."[/intel]

[intel=]

Rather than continuing to spend billions on Atom subsidies, Intel now plans to license its x86 Atom, 3G and LTE baseband IP to Chinese fabless chip designers including Rockchip, Spreadtrum and RDA Microelectronics, following a licensing model similar to ARM or Qualcomm.

Those partnerships expect to launch new "SoFIA" chips by the middle of next year, which Intel hopes it won't have to continue to subsidize. However, that move will also result in Intel collecting far smaller IP royalty payments while its new chip design partners earn most of the money in selling finished chips to tablet manufacturers.

If I'm not wrong, 3G and LTE SoFIA chips are not even being manufactured by Intel, but instead by Taiwan Semiconductor.

And what about Broadwell? So far the 14nm killer SoC has been really disappointing. Rumors are that Intel could ship just few pieces and then move directly to Skylake.


After losing Apple's iPad business, Intel has bled $7 billion while heavily subsidizing cheap x86 Atom Android tablets[/intel]

 

[Daniel Nenni]

Here is the answer:

Intel Corp., (INTC) struggling to gain a foothold in mobile computing, is merging its mobile phone and tablet businesses with the division that makes chips for personal computers.
The reorganization of the two units, which have been running at a loss, announced internally, will be completed early next year, Chuck Mulloy, a spokesman for the Santa Clara, California-based chipmaker, said yesterday.


“The lines are blurring between PCs, tablets, phablets and phones,” Mulloy said. “The idea is to accelerate the implementation and create some efficiency so that we can move even faster.”


The new combined unit will be led by Kirk Skaugen, who currently heads the PC-chips business. Hermann Eul, currently in charge of phone and tablet chips, will stay on to help the transition and until a new post for him is announced in the first quarter of 2015, Chief Executive Officer Brian Krzanich told employees in a memo, Mulloy said.

Bottom line: Intel mobile is dead, my opinion

 

[Arthur Hanson]

Like it or not, Intel will continue to do well as long as the Wintel monopoly continues. Apple and Xiaomi present the only real threats on the horizon and maybe Google in the future. The Wintel profits still represent a significant barrier for TSM and Samsung, but nothing lasts forever. Intel has navigated the twists and turns better than most over the years, but the tech world is still shifting eastward. The next big frontier is medical with the world population going up, getting older and getting richer. IOT in medical will be the next great market with untold ramifications. This market will feed on itself as it extends life spans that demand ever more services in a snow ball effect. The technical aspects will be dwarfed by the financial, social and environmental changes that this change will cause.

 

[lefty]

It's obvious that Intel is merging mobile and PC to hide the loses of it's mobile division from investors. That indicates that Bay Trail will require subsidies for a long time to come.

 

[hist78]

My question to all the guru here is: Can one day in a near future Microsoft Windows run better and cheaper on non-Intel processors? If the answer is yes, then Intel's big trouble is probably not on the mobile products but on their own Windows/Intel turf.

 

[lefty]

My question to all the guru here is: Can one day in a near future Microsoft Windows run better and cheaper on non-Intel processors? If the answer is yes, then Intel's big trouble is probably not on the mobile products but on their own Windows/Intel turf.

To get Windows running on ARM is the easy part. The hard part is to get developers to re-write their aplications for ARM. This is basically why Windows RT failed.

 

[hist78]

From my understanding one of the problem is that there is not enough and good apps written for Windows RT (the operating system) which runs on the Microsoft Surface tablet (with NVidia Tegra processor inside), not because the processor itself. There are more analysis about why Windows RT failed if you do a Google search.

Correct me if I am wrong, there is no traditional Microsoft Windows operating system actually running on ARM processors. I am talking about Windows Server 2012, Windows 7 and 8. If one day Apple starts using A series processors for Mac and mainstream Windows start running on ARM based computers, what can Intel do? Do more "contra revenue" marketing?

 

[astilo]

Bottom line: Intel mobile is dead, my opinion

And not just because they haven´t released so far a single good mobile chip, but I would say, more because their business model doesn´t allow them to produce decent and cheap SoCs at the same time. Without a monopoly, and not by a chance they can get one on mobile, they cannot charge their premium price for their chips.
So, yes, welcome back to the future Intel. This is reality, not dreamland.
Trying to sell crappy chips in the China market won't help either.
I fear that because of the mobile huge committment, they lost focus also on the CPU main design: the last good one to me, was the 32nm SandyBridge.
Since then, only thicks (the process lead cannot be of course discussed). Tocks have been merely GPU improvements.
On top of that, broadwell is not performing well and the 14nm is not as easy as they expected to be manufactured, causing a big delay in the 14 nm roadmap. Skylake and Broadwell could overlap, and I believe that the latter will have a very short life.
So, focusing again on their main business could be probably the best option they currently have.

 

[Arthur Hanson]

Intel has been riding the Wintel monopoly way to long without developing an alternative. Monopolies eventually hurt the perpetrator as much as the market. Mobile is where the vibrant, dynamic, productive ecosystem now exists and a monopoly based organization will either adapt or come to a sad end.

 

[Daniel Nenni]

And it is done:

Intel Quits Mobile