Intel Ready to Tackle Challenges of Mobile Device Market

By Tracey E. Schelmetic April 12, 2011

It's official: chip maker Intel wants in on the tablet computer market.

You might wonder, aren't they there already? After all, Intel is the largest (by revenue) and most powerful semiconductor company in the world, and its chips are inside about 80 percent of the world's laptop and desktop computers. But getting into the mobile market – cell phones and tablets – has been a little trickier for the Mountain Valley, Calif.-based company.

Intel may be a victim of its own success on this point. While the company is known for pushing the processing speeds of its chips to the limit, reports the Associated Press, the amount of power available in mobile devices is much less, which makes super-fast processing speeds and high power less feasible. Energy efficiency has become the biggest challenge for Intel as both devices and their batteries get smaller, testing the limits of engineering in a different way. And with more consumers starting to opt to buy tablets instead of upgrading their PCs, Intel is clearly looking to diversify its revenue sources.

Intel's chips have been maligned as too power-hungry for the smallest of mobile devices, a criticism Intel is hoping its new chips address. Intel is trying to elbow in to a mobile market dominated by lower-power processors from companies such as Qualcomm Inc. and Texas Instruments Inc. Apple Inc. designs its own chip for the iPad.

Intel also faces a challenge in that mobile chips are generally built around a different chip design, from a company called ARM Holdings Inc., than the so-called x86 design that Intel uses. Intel said Monday that more than 35 tablet and “hybrid” computers are being built on its newest chip, which is part of the Atom family of chips.

As for smartphones, Intel says a processor for that market is scheduled for release later this year. Intel has not yet announced specifications for those chips.

Intel has a history of dabbling in, and retreating from, the wireless business, so the company's success in this market is not a foregone conclusion.

It sold its mobile-chip business in 2006, and then last year bought the wireless-chip division of Germany's Infineon Technologies AG for $1.4 billion. With that deal, Intel bought its way back in to a booming market, but only got a bit player. The Infineon division, while notching some high-profile wins such as Apple's iPhone, only owned about 5 percent of the total market for processors and other communications chips for mobile phones, according to Gartner Inc.

Analysts are split about Intel's prospects. Some say Intel is too late to the game to score any major market share. Others caution that Intel, with $11.7 billion in net income last year on $43.6 billion in revenue, has plenty of money to pour into making its mobile division a winner.

Tracey Schelmetic is a contributing editor for TechZone360. To read more of Tracey's articles, please visit her columnist page.

Edited by Janice McDuffee

TechZone360 Contributor

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