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Intel Pushing Into Mobile And Foundry, Challenging TSMC

Intel Corporation (INTC - Get Report) is pushing into mobile and foundry sectors, and while its dominance in PC gives it some leverage, the company has plenty of catching up to do if it's going to take market share away from competitors like TSMC and QUALCOMM, Inc. (QCOM - Get Report).

"The company's focus was on restoring growth in traditional notebooks, maintaining double-digit growth in the enterprise and data center, and in a challenge to TSMC, expanding its foundry strategy to target any customer and shifting more investment to a revamped smartphone and tablet roadmap," wrote Credit Suisse analyst Randy Abrams after attending Intel's recent analyst day.

New CEO’s plans for Intel

Intel Corporation (INTC - Get Report)'s new CEO Bob Krzanich announced that the company is now willing to work with any potential foundry customer, breaking away from former CEO Paul Otellini's policy of only taking on exclusive contracts or a system projects. "The new strategy is pragmatic and probably the only way foundry could achieve meaningful scale," writes Abrams. "By avoiding non-competing customers, Intel was limiting its foundry business to a very small slice of networking and high-end programmable logic customers, whereas most of the foundry business comes from mobile chipsets and graphics processor companies that compete directly with Intel."

Intel Corporation (INTC - Get Report)'s main advantage is that its area scaling is shrinking faster than TSMC's, and scaling should be 35% ahead by 14nm and 45% head of TSMC's by 10nm. But this scaling advantage will be offset by a significant cost disadvantage. Intel's cost structure is set up for the PC market and it will have to change dramatically to be competitive in the mobile space.

intel area scaling 1113

intel costs v tsmc 1113

Intel losing in mobile market

Intel Corporation (INTC - Get Report) also lags behind its competitors in mobile integration, network technology, and IP relating to foundry. "We expect QUALCOMM, Inc. (QCOM - Get Report) to retain advantage through the coming year as it still has far more of the connectivity and 4G modem building blocks already integrated and is also now on its 4 th generation LTE qualified across all the carriers with launched service, an advantage over other chipsets including Intel," writes Abram.

Intel Corporation (INTC - Get Report) recently announced that it expects flat revenues for 2014, assuming growth in its data center and software businesses offset by losses in PC client sales with flat architecture sales.

-By Michael Ide

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