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Intel is losing billions on mobile development

Intel has published its revenue report for Q1 2014 and 2013, revealing that the company's mobile communication division struggling with large losses.
April 16, 2014
intel logo

Intel has just published its revenue report for the first quarter of 2014 and things are not looking so good for the processor giant’s mobile division. Last year, Intel’s mobile chip division lost a rather substantial $3.15 billion, a large increase over the operating loss of $1.78 billion in 2012.

The situation is looking even worse this year, in the first quarter of 2014 alone the Mobile and Communications Group saw a $929 million operating loss, accumulating just $156 million in revenue. The division’s revenue is down 52 percent compared with the previous month and down 61 percent year-over-year.

Intel Operating Profit 2014

Just to be clear, Intel’s mobile division includes Wi-Fi, Bluetooth, GPS, cellular connectivity, and mobile processor technologies.

It appears that Intel is struggling more and more in the mobile world, revenue was sluggish throughout 2013 and losses have been accumulating over the past couple of years. We’ve covered Intel’s need to catch-up with ARM in the past, but it’s clear now that the lack of Intel powered mobile products is really starting to bite.

Intel Revenue Chart Q1 2014

A year of announcements, but no substance

Intel hasn’t been quiet about its mobile plans over the past year, in fact we probably know more about Intel’s future products than we do about market leaders’ like Qualcomm. Despite all the presentations and roadmaps, Intel has yet to produce a product that has managed to entice enough smartphone or tablet manufacturers to take notice. This is obviously troubling, as smartphones and tablets are huge market segments.

Device Shipments 2013
Intel has missed the smartphone and tablet boom and is stuck with a stagnant PC market.

Intel unveiled its Silvermont microarchitecture almost a year ago, which included its new Merrifield chips for smartphones and Baytrail processors for tablets, but only officially launched its products at this year’s Mobile World Congress. Performance wise, these chips are set to offer up a comparable experience to existing top of the line ARM processors, and should offer a much better consumer experience than the disappointing CloverTrail chips that Intel was trying to shift throughout 2013, so why the long wait?

Merrifield was originally scheduled for a late 2013 showing, but has so far only been seen in an Intel demo handset at this year’s MWC. Baytrail tablets are set to appear sometime in the first half of the year, but they’ve been a long time coming too. More importantly, we still aren’t seeing any real interest in Intel’s chips from manufacturers.

Intel CloverTrail vs Merrifield

In the end, Intel powered very few mobile products last year. The ASUS PhonePad and Lenovo K900 are the only ones which spring to mind, neither of which were widely available or really impressive devices. CloverTrail+ was supposed to be Intel’s big push into the world of mobile, but, after all the dodgy benchmarks, very few manufacturers bothered to pick up the chip.

Part of Intel’s problem, as I’ve mentioned countless times in the past, is its lack of integrated modems. If Intel is serious about rivalling the likes of Qualcomm, integrated connectivity really is a must. Intel is working on this technology, but doesn’t expect its own integrated LTE products to arrive until 2015.

Is it too late for Intel?

Before we become too pessimistic about Intel’s chances in the mobile world, the company has a decent looking roadmap lined up for the coming year and beyond. Intel’s biggest problem seems to be that it’s just taking too long for any of these products to reach the market.

Intel will be the first to manufacture 14nm processors, which should give the company a substantial edge over ARM manufacturers in terms of power efficiency, but Cherry Trail isn’t set to arrive until late 2014. Cherry Trail is aimed at the tablet market, with 14nm landing on smartphones in the form of Intel’s more flexible Broxton architecture in 2015. In the meantime, we’re finally going to see the high performance dual-core Merrifield processors arrive sometime in the first half of 2014, followed by the quad-core Moorefield versions in the second half of the year.

intel_atom 14nm
Intel’s biggest strength lies in its world leading manufacturing process. It will be the first to 14nm, but smartphone products are still a long way away.

Intel also has a plan for the lower end of the market, its integrated 3G SoFIA smartphone processors are also scheduled for an appearance towards the end of the year. Development of these more budget oriented chips will continue into 2015, where Intel will launch its 14nm 4G/LTE SoFIA chips. For premium products, Intel is also rolling out its own LTE modems this year, in the form of its XMM 7260 chip, which is expected to accompany its Merrifield processors, hopefully at a competitive price point.

Broxton will be the culmination of Intel’s mobile efforts come 2015, which will converge the company’s tablet and high-end smartphone 14nm roadmap. The new design will allow Intel to easily adjust the make-up of its chips to better suit market demands, which should see an end to most of Intel’s current issues, such as modem integration and expensive additional components. However, Broxton isn’t due to arrive until sometime in mid 2015. Intel will be relying on Merrifield and Moorefield to carry the company through the next year.

Intel Mobile Roadmap

It seems that Intel has it all sorted out, providing that they can execute the plan properly this time around. Whether or not this will be enough to compete with ARM’s price and performance dominance over the mobile world is another matter.

At least Intel will finally have some mobile products for manufacturers to consider later this year.