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.

Robert N. Castellano, Ph.D, is President of The Information Network, a leading consulting and market-research firm for the semiconductor, LCD, HDD and solar industries. Castellano is internationally recognized as one of the leading experts in these areas. He has nearly 25 years of expertise as an industry analyst. Castellano has provided insight on emerging technologies to many business and technical publications, including Business 2.0, BusinessWeek, The Economist, Forbes, Investor's Business Daily, Los Angeles Times Magazine, The New York Times, USA Today and The Wall Street Journal. He is a frequent speaker at conferences and corporate events. He has over 10 years' experience in the field of wafer fabrication at AT&T Bell Laboratories and Stanford University before founding The Information Network in 1985. He has been editor of the peer-reviewed Journal of Active and Passive Electronic Devices since 1985. He is author of the book "Technology Trends in VLSI Manufacturing," published by Gordon and Breach. His book "Solar Cell Processing" was published in 2009 by Old City Publishing. He received his Ph.D. in solid state chemistry from Oxford University.

More from Technology

PayPal CEO: Retailers Coming to Us to Figure Out How to Compete Against Amazon

PayPal CEO: Retailers Coming to Us to Figure Out How to Compete Against Amazon

60 Seconds: What the Heck is GDPR?

60 Seconds: What the Heck is GDPR?

Jim Cramer: Why I am So Bullish on Apple's Services Revenue

Jim Cramer: Why I am So Bullish on Apple's Services Revenue

3 Red-Hot Chip Stocks Trading at Bargain Prices

3 Red-Hot Chip Stocks Trading at Bargain Prices

By the Numbers: The Future of Autonomous Driving

By the Numbers: The Future of Autonomous Driving