The Future of Intel

The Future of Intel

October 3

Intel recently invested $1.5 billion into the mobile phone chip market in China. According to the agreement, Intel will build chips with modems and wireless features that can be used in inexpensive phones. Otherwise known as system on a chip (SOC), such investments indicate Intel’s desire to become a major player in mobile, which has not been easy to this point.

To most people, Intel is the company that builds the processors that power their computers. That’s mainly due to the extremely successful, “Intel Inside” marketing campaign that began in the early 1990s. Before this campaign, Intel was one of many computer component makers, albeit, one of the largest. The campaign quickly made Intel a household name which coincided with a period of massive growth in the PC industry.

While Intel is known mostly for its line of processors which power servers, desktops, and laptops, it also has made substantial investments outside its core business. This week, I’d like to take a look at what Intel is up today and see what its future might hold for them.


Intel’s success in building processors that power most traditional computers, has not resulted in immediate success in mobile, where ARM chips dominate. ARM chips are less complex and thus less expensive to build compared to Intel’s X86 and X64 chip designs.

Another major difference between them is that Intel designs and manufactures its own chips while ARM licenses its chip designs to companies such as Qualcomm, NVIDIA, and Samsung. Those companies then take the designs to a manufacturer such as Global Foundries or TSCM. This means there’s more completion at each layer which helps drive prices (and margins) down. Intel faced a similar dilemma with desktop chips when AMD attacked the lower end of the market.

But ARM has proven to be peskier than AMD. ARM chips power smartphones across all price points. Apple hasn’t made it any easier for Intel on the high end of the smartphone market by designing their own “A” Series of chips which power the hundreds of millions of iPhones and iPads. Intel was offered the chance to build the chip for the first iPhone, but Intel CEO at the time, Paul Otellini, turned down Apple down because he didn’t think the volumes would be large enough to offset the smaller margins.

So how does Intel plan to sell mobile processors? Well, if the latest investments are any indication, they are hedging their bets. I expect Intel to continue making investments in emerging markets where there is fertile ground for many players, such as China. Intel also has the chip building plants that could theoretically manufacture ARM chips, but doing so would place continued pricing pressure on its own chips.

Some believe that it’s inevitable that Intel will manufacture Apple’s chips as Tim Cook attempts to decrease his reliance on Samsung as a supplier. I can’t imagine Intel would make the same mistake twice.

Internet of Things

I bought a Nest Thermostat this year and love it. I’m not as excited about my FitBit fitness tracker but maybe that has something to do with my lack of exercise. Either way, these are just two examples of the Internet of Things (IoT).

Intel says that IoT devices will see massive growth over the next few years. Intel says devices will jump from 15 billion in 2015 to 200 billion in 2020. Of course, Intel wants to build the chips that power these devices, and they are well positioned due to their strong engineering, manufacturing and expertise in building SOC.

intel's vision

Intel’s vision of IoT sees tools allowing for car customization by hand – Photo courtesy of Intel

Intel has broken down IoT by industry: Business/Manufacturing, Health Care, Retail, Security, and Transportation. Business and Health Care will see the largest influx of devices or about 70% of the total. But what are these devices?

Well, they are robots, health monitors, inventory tracking devices, remote sensor, self-parking cars, and more. Like I said, the range of device is so vast that it almost feels like an “other” category. But the number of devices is too large to ignore, and Intel wants to be right in the middle of it when this market blows up.


Intel is still the dominate player in server, desktop, and laptop CPUs. For many years at Puget Systems, we used to offer a number of AMD chips on our less expensive custom PCs, but there has been so little interest over the past couple of years that we stopped offering them. We continue to offer AMD’s server chip (Opteron), but even there, Intel’s Xeon is the clear performance leader.

Some would say that Intel has been living off its Sandy Bridge technology for a while. I know, they’ve released Ivy Bridge and Haswell processors, but those were incremental “tick” upgrades. Enthusiasts finally had something to cheer about last month when Intel released its Haswell-E line (X99 chipset) including the 8-core Intel i7 5960X. This is the first mainstream 8-core processor we’ve seen from Intel, and it’s a performance beast. With all the attention Intel has paid mobile, it was great for them to toss the enthusiasts a bone.

Next up for Intel is Broadwell, its 14 nanometer microarchitecture that’s been delayed till 2015. With its smaller footprint, lower power consumption and better graphics, Broadwell will be an ideal fit for laptops and fan-less chassis designs.

What’s after Broadwell? Skylake. Normally tight-lipped Intel has already been touting features of Skylake that include increased date transfers and wireless charging.

Intel has a lot of plates in the air. Over the next couple of years it will be interesting to see if desktop PC sales taper off or if we’re seeing signs of stabilization like we did last quarter when PC sales actually increased and surprised a lot of analysts.  Intel is one of the few companies with the means to jump-start a market like we saw with SSDs.

Mobile is the area to keep an eye on because there’s so much potential there for Intel. Many pundits have counted them out of the race, but I’m predicting they won’t be on the sidelines for much longer.