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Investment Analysis Clubs / Value Hounds
|Subject: Re: INTC: Value stock?||Date: 11/16/2012 8:32 PM|
|Author: putnid||Number: 12378 of 20340|
Some people believe that Intel will eat ARM's lunch in mobile while others believe the opposite (I'm in the second group). Intel makes what is in essence a standard product in their foundry. ARM allows mobile makers to custom design their chips based on one of several ARM architectures. When using a standard chip you end up with a standard product, not one that differentiates itself significantly from the pack. According to the article "ARM states that there are over 80 licensees for the Cortex family." That's at least 80 firms that are not going to become Intel customers, maybe more. - captainccs
Your takeaway from the Fool blog post is flawed in its understanding regarding the competitive distinctions between Intel and ARMH.In brief, TXN is exiting the mobile market because it's determined that its chip, based on an ARM-licensed core architecture, struggles to compete against other chip-makers also using ARM-licensed core architectures with custom overlays. OK. I get that. It's tough to compete in a market where a whole lotta players develop custom chips around a generic core.
Here's a good overview of the ARM architecture that's being licensed to whomever wants to pay to play:
The ARM architecture describes a family of computer processors designed in accordance with a RISC CPU design developed by British company ARM Holdings. ARM architecture has been in development since 1990 and is the most widely used 32-bit instruction set architecture, in numbers produced.
Using the RISC approach, the core ARM processor requires only 35,000 transistors, compared to the millions in many conventional processor chips, resulting in lower power usage and making it very attractive in smaller devices. The company ARM Holdings does not manufacture its own electronic chips, but assigns different licenses to semiconductor manufacturers. It is thus easy for companies to build a low-energy system on a chip for an embedded system incorporating memory, interfaces, radios, etc. The earliest example was the Apple Newton tablet but this same approach is still used in the Apple A4 and A5 chips in the iPad.
In 2011, ARM's customers reported 7.9 billion ARM processors shipped, representing 95% of smartphones, 90% of HDDs, 40% of digital televisions & set-top boxes, 15% of microcontrollers and 20% of mobile computers.
In short, what we have here is a chip architecture requiring low power mostly as a consequence of the fact that it offers limited computational capability. There's a big market for chips like that, and I expect that ARMH will enjoy healthy revenues for years to come.
What Intel offers is something radically different:
Intel® Architecture Leads the Microarchitecture Innovation Field
Microarchitecture is a blueprint of chip elements. This blueprint, when combined with advanced nanotechnology, enables computing devices to be more capable and energy efficient. Intel’s microarchitecture team continues to make giant leaps in innovation and has recently introduced the world’s first 3D transistors manufactured at 22nm.
Introduced in 3rd generation Intel® Core™ processors, Intel’s 3D, 22nm microarchitecture marks a turning point in the fundamental structure of the computer chip. Until now, transistors were 2D (planar) devices. Intel’s 3D tri-gate transistor uses three gates wrapped around the silicon channel in a 3D structure, enabling an unprecedented combination of powerful performance and ultra-low power consumption.
Ergo, the difference. ARMH licenses a 2-decade old chip architecture that is cheap to manufacture and can be customized by anyone interested in doing so to suit particular low energy consumption/low computational power needs.
Intel has developed a 22-nm 3-D chip architecture that offers low power/high computational capabilities. There's no point in Intel offering licenses to other chip foundries because other foundries simply can't produce the same sophisticated chip architecture. (Incidentally, Intel is already moving towards 14-nm architecture). As I've mentioned several times before, Intel is a full generation ahead of any other chip manufacturer.
The only question, then, is who has a competitive advantage...and in what applications? ARMH benefits greatly from offering a cheap chip design well-suited for a myriad of applications. I applaud the company for that. I wish it well.
On the other hand, I happen to be one who believes that there is a relentless drive to make enterprise servers more efficient, personal computing devices ever more capable and "smartphones" ever smarter.
Companies wishing to offer ever more sophisticated and powerful computational devices may very well opt to turn to Intel for its chip-making expertise, working with the company to produce chips that serve powerful needs. Microsoft did exactly that during the "Wintel" era. In the enterprise space, VMWare (data virtualization) is working with Intel to optimize enterprise server chips.
Smartphone makers had been satisfied with ARM-cores for many years. Will they continue to be satified to base their designs around a chip offering limited capabilities? Some, undoubtedly, will. Others? I'm kinda thinking there's a growing interest in developing really, REALLY "smart phones" as well as potent tablets, ultrabooks and all manner of devices I haven't yet imagined.
I view ARMH and Intel as two distinct companies offering two very distinct products. I believe the marketplace has ample room for both. It ain't a zero-sum game.
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