Intel's new smartphone chip is key ARM battle

Analysts say Medfield's power efficiency and cost may measure Intel's success against ARM in the smartphone market

Intel's upcoming Medfield chip will be an acid test of the chip maker's ability to enter the smartphone market and battle ARM, analysts said.

The first smartphones with Intel inside will reach store shelves early next year, according to the company. However, device makers may be wary of Intel's smartphone strategy and its competitiveness against rival ARM, whose processors go into most of the world's smartphones, according to analysts.

Intel's has faced multiple setbacks in its attempts to get its chips into smartphones. In January, Intel said Medfield smartphones would become available in the second half this year, but revised that at last week's Computex show in Taipei, saying the smartphones would instead ship early next year. A cancelled product from LG and an uneasy alliance with Nokia hurt Intel's earlier attempts to bring a smartphone with its chips to market.

Medfield combines an Atom CPU with a number of specialized cores for functions such as graphics acceleration. It will replace Moorestown, a chip Intel designed for smartphones although it was never used in any. LG showed a smartphone based on the chip, the GW990, but cancelled it before it reached production.

For device makers, unproven Intel chips inside phones may be difficult idea to swallow, said Jim McGregor, chief technology strategist at In-Stat, who also attended Computex.

"While Intel is providing complete designs and support for a few select [companies], it is not clear if it is enough to be competitive. Just look at Nokia. Intel worked with them for a decade and they never introduced an Intel-based handset," McGregor said.

Nokia last year partnered with Intel to develop Meego OS, but in February abandoned that effort in order to establish a future smartphone strategy around Microsoft's Windows Phone OS. Intel CEO Paul Otellini called Nokia's switch a major blow, but later said that Nokia's withdrawal forced the chip maker to pursue other companies to adopt Medfield.

Intel's processor is more performance-oriented than ARM, but smartphone chips also have to be competitive on power efficiency and price, McGregor said. ARM processors are generally considered more power-efficient than Intel processors.

Intel's chips have traditionally been built for speed and not power efficiency, but the chip maker is being more serious about power consumption, said Doug Freedman, senior semiconductor analyst at financial analyst firm Gleacher and Co.

"We are finally starting to see Intel accept that change is required to win in the ultra-mobile space and they are redesigning the PC to look more handset-like," Freedman said.

ARM however has an advantage as most of today's smartphone software is written for ARM-based operating systems, Freedman said.

The emergence of ARM, a small company that licenses processor designs to chip makers, is one of the factors that has driven Intel to change the way it designs and manufactures its chips to make them smaller and more power-efficient.

Intel typically rolls out a new manufacturing technology, also known as a process node, every two years or so. Newer processes allow them to put more transistors on a chip by making them smaller and packing them closer together, with the process nodes being described by the average size of the smallest features on the chip.

Now Intel wants to accelerate that rhythm: Medfield will be made using a 32-nanometer process, and Intel will start making chips using a 22-nm process later this year. The 14-nm and 11-nm processes that follow will each be introduced after gaps of less than two years, company officials said.

That, Intel said, will allow it to release chips with a power consumption equal to those of ARM in 2013.

Despite the progress in manufacturing technology, industry executives have said that Intel chips may fail to catch on in smartphones.

Last week, Texas Instruments CEO Rich Templeton took a shot at Intel, saying that because of its long history of making power-hungry PC chips, the company may struggle to make chips consuming less than 1 watt that can perform in real-world conditions. TI makes chips for smartphones and tablets with ARM processors.

Intel has also introduced 3D transistors for use in its next-generation of 22-nm chips, with the transistors being 37 percent faster and consuming less than half the power of 2D transistors on its current 32-nm chips. Production of chips using the 22-nm process will begin later this year.

The impact may not be immediate, but Intel could wrest some market share from ARM over time with better manufacturing technology, said Roger Kay, president of Endpoint Technologies Associates.

"As the accelerated process node schedule for Atom kicks in, Intel's story gets better, and I predict a greater number of wins and impact on ARM's hegemony in phones," Kay said.

Intel is also realizing the significance of the fast-growing markets for smartphones and tablets, which are becoming more important with PC shipments slowing down. On Monday, market research firm IDC cut its 2011 worldwide PC shipment growth forecast to 4.2 percent from 7.1 percent due to sluggish economies and a growing interest in tablets.

Intel is a manufacturing powerhouse with massive technical and financial resources, so the company shouldn't be counted out of the smartphone race, In-Stat's McGregor said.

"That does not mean they will have the right product at the right time from a competitive standpoint. They have taken several shots at the graphics market and always ended up short. I don't know if this is a similar case, but Medfield will definitely be a critical test," he said.

Copyright © 2011 IDG Communications, Inc.

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