Intel Becomes a Major Foundry
Prediction: It's no secret that Intel is losing the mobile chip space to ARM Holdings (ARMH), as Intel's -x86 architecture can't compete when it comes to power consumption.
Intel has a few courses of action: continue going head-to-head with ARM-based processors as it's done before, license ARM's technology, or become a foundry, manufacturing chips for third-party companies.
I suspect that Intel will ramp up its foundry business for companies looking to produce their own chip sets, similar to what Apple is doing with its A-series chips for the iPhone and iPad. Intel is already producing chips for smaller third parties, but nothing like what Apple would need for its iDevices. That would make Intel one of the largest foundries in the world, competing with Samsung and Taiwan Semiconductor (TSM).
I don't think we'll see Apple cave to Intel on using -x86 architecture in any iDevices, as the app ecosystem has been created using ARM-based technology. And I can't see Intel licensing ARM's Cortex processors. Intel will do anything to get a piece of the Apple pie, particularly as rumors hint of Apple moving away from Intel altogether.
I think I've gotten this one pretty well. Intel signed deals earlier in the year to make the foundry business, where it makes chips for third-parties, become a bigger part of its business. New CEO Brian Krzanich has said that he's open to making the foundry business a bigger part of Intel's functions.
On Intel's second-quarter earnings call, Krzanich said the foundry business is "moving from crawl space to walk space." For shareholders, this transition requires patience, with a 12 to 18-month lag between when a customer is signed and revenue flowing from the foundry.
There's always been this speculation that Intel will become a foundry for Apple, and though that hasn't yet, it was rumored earlier this year, and is something I think is more likely to happen than not, perhaps not until 2015 though.
Grade: B+ (Intel has certainly upped its foundry position, but it would be hard pressed to call it a "major" foundry.)
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