Intel Turns to Rockchip to Scale the Great Wall of China's Tablet Market

NEW YORK (TheStreet) -- In a deal that went almost unnoticed, last week Intel (INTC) struck a strategic partnership with China-based semiconductor company Rockchip.

After having allowed the mobile devices era to sneak up from behind and trample its bread-and-butter PC dominance, Intel management, which has embraced the Internet-of-Things (Iot), is determined not be fooled twice.

Some call it paranoia. I call it leaving no stone unturned. Investors should keep an eye on Intel's stock, which closed Wednesday at $27.60, up 6.3% for the year to date.

The deal with Rockchip makes sense. PC shipments have plummeted and won't reverse any time soon -- if ever. Mobile devices, on the other hand, are still on the uptrend. Smartphones and tablets, in particular, have posted robust numbers to the extent that both Apple (AAPL) and Samsung (SSNLF) can co-exist and still leave room for smaller players to profit.

Consider that four years ago total tablet shipments stood at 72 million. That figure grew 201% to 217 million three years later. Research firm IDC predicts that tablet shipments will grow by another 80% in the next three years, reaching 386 million.

This means that by the end of next year, tablets would have surpassed all PC shipments. Where do you suppose that would leave Intel?

With the Rockchip deal aimed at expanding Intel's mobile/tablet presence in Asia, management is taking hold of its own fate.

Without getting too technical, Intel will provide Atom cores and 3G modem technology to Rockchip. This agreement calls for Rockchip to use system-on chips (ScC) from Intel, allowing both companies to seize market share in lower-priced tablets segments that are powered by Google's (GOOG) Android.

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