INTEL’S IDENTITY CRISIS!

Intel still Inside – ARM Outside, that’s where the fun is!

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Intel originally was the original DRAM manufacturer. Intel reaped the benefit of their chip designs due to the success of their 386 architecture. Those were the foundation of the PC era, and while they faced nominal competition from AMD, they gained many of the economic benefits of a monopolist more than Microsoft. But for a brief spell around the turn of the century, a “good” computer required an Intel chip.

Throughout the PC period, Intel invested heavily in their chip design. They learned the lesson of DRAM becoming cheap, and were determined to never be second class; their microprocessors would always be superior performers.

The problem with setting such ambitious goals, of course, is that you are usually successful. Intel chips have no rival when it comes to PC performance; unfortunately for Intel, PCs are in decline. Mobile devices, such as iPhones, Androids and tablets, are in ascendance, and there Intel’s core strength in ALL-OUT PERFORMANCE is a 2nd-class citizen in mobiles, until now.

Power consumption is critical, as well as custom logic for specific functions such as graphics, motion, GPS, radios and media decoding. General purpose performance is nice-to-have.

Intel’s identity as a chip designer is increasingly irrelevant.

THE COMMODIFICATION OF CHIP DESIGN

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This is not a marketing gimmick, the only person who believed that already got fired.

After all, nearly all mobile chips are centered on the ARM architecture, from a accidental billionaire small British company due to Steve Jobs fell in love with their energy efficient ARM chips who have been designing chips for old Psion and Palm PDAs. For the cost of a license fee, companies, such as AMD, Nvidia, Qualcomm, MediaTek, Apple can create their own modifications, and hire a foundry to manufacture the resultant chip. The designs are unique in small ways, but design in mobile will never be dominated by one player the way Intel dominated in x86 PCs.

THE RISE OF MANUFACTURING

It is manufacturing capability, on the other hand, that is increasingly rare, and thus, increasingly valuable. In fact, today there are only four major foundries: Samsung, GlobalFoundries, TSMC, and Intel. Only four companies have the capacity to build the chips that are in every mobile device today, and in everything tomorrow.

Massive demand, limited suppliers, huge barriers to entry. It’s a good time to be a manufacturing company. It is, potentially, ironically a good time to be Intel. After all, of those four companies, the most advanced, by a significant margin, is Intel.

The only problem is that Intel sees themselves as a design company, due to the huge success of Pentiums.

BACK TO THE FUTURE

Today Intel is increasingly under duress. And, once again, the only way out may require a remaking of their identity. So they have just announced the only logical way forward. Ok, me too. Hell breaks loose, Intel will start making those ARM chip, let it be for Apple, Samsung or anyone. Intel is already the best microprocessor manufacturing company in the world. They needed to accept and embrace their new destiny and I think they just did.

From DRAM to Core Processors Design transformation was from a low margin volume business to a high margin one; Investors love that. To go in the opposite direction may take incredible turns, but for Intel, right now it’s the only way forward where the money is.

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