NEW YORK ( TheStreet) -- Back in January, the Information Network questioned whether Intel's ( INTC) slashed revenue of about $1 billion for the fourth quarter of 2008 was because of its misjudging the success of the netbook and its Atom processor. According to its argument, Intel manufactured $29 Atom processors slated for a burgeoning netbook market, instead of profitable Penryns priced at $279 and used in notebooks. The thesis presented by the Information Network was that at a price difference of $250 a processor between the Penryn and Atom, Intel lost $1.14 billion in revenue in 2008 by making the cheaper Atom processors because of contractual obligations with netbook manufacturers. According to the analysis, a total of 2,436 Atoms can be made on one 300mm wafer for a total selling price of $70,600 per wafer, neglecting edge losses and yields for this quick calculation. In contrast, a total of 660 Penryns can be made on one 300m wafer for a total selling price of $184,100 per wafer. This week, Intel announced that the new N450 Atom is 60% smaller and 20% more efficient than its predecessor. That translates to 4,060 Atoms made on one 300mm silicon wafer. At a selling price of $64 per Atom, the total selling price per wafer of $259,800 is more than the Penryn chip for the notebook market. According to a report from the Information Network, 31.1 million netbooks are forecast to be made in 2010. The report also notes that Intel will exhibit an 80% share of the netbook market, competing against Arm Holdings ( ARMH). Neglecting volume discounts to netbook manufacturers, Intel stands to make $1.6 billion on the Atom for just netbooks.
Since the price differential of a 300mm wafer with the new N450 Atom ($259,800) vs. the old N270 ($70,60) is $189,200 and a total of 6,130 wafers of good Atoms will be processed (neglecting yield loss), Intel stands to generate $1.2 billion more on sales of the N450 for netbooks in 2010 than it would have with the N270. Add to Intel revenue the low-power chipset that works together with the Atom CPU. Nvidia ( NVDA), meanwhile, reportedly has landed orders for Ion 2-based chips designed to support the N450, so it too stands to generate substantial revenue. Intel says it has more than 80 design wins to date for the new Atom platform from original equipment manufacturers like ASUS, Acer, Lenovo, Dell ( DELL), MSI Computer, Toshiba, Samsung and Fujitsu. The N450 gives Intel added muscle against ARM's challenge in its Smartbook space. At the CES trade show in January, I anticipate quite a lot of announcements coming out of the ARM camp to counter Intel. Nvidia, for one, will make a major announcement about its Tegra family, which marries an ARM-based processor with its GeForce GPU.