Intel’s chips deal with ARM helps it into the mobile market

The news that Intel had signed a deal with ARM to produce its rivals chips may be seen by some as an admission of defeat of sorts.

At one point, Intel was trying to crack that market with its own line of mobile focused chips, hoping to replicate its success in the PC market in the new generation of mobile devices.

It needed to make the change. Intel still gets much of its revenue from the ever declining PC market, which hit a peak five years ago and has been on a steady fall ever since. Hastening its demise is the new generation of internet connected devices: tablets and smartphones.

The impact has been huge: by the end of 2016, experts believe the PC market will have 100 million units less than the 2011 high.

It should have been an easy transition for Intel. The company was once the undisputed king of the chip makers. If you had a PC, chances are there was an Intel chip running it. Consumers knew and trusted the name. Many could repeat the little chime that ran at the end of PC television ads along with the “Intel Inside” log.

Times have changed. The shift from PCs and laptops to tablets and mobiles has left the company appearing to flounder, unable to find a solid enough footing in the market.

Intel has, by and large, missed the mobile boat. And yet it has 10 nanometer production lines that could be put to good use in making chips.

With its PC business diminishing, something needed to give. Licensing technology from third-party rivals will give Intel a way into the mobile industry.

Mobile market domination

ARM on the other hand has dominated the mobile industry. Its chip design is used by

Apple

,

Samsung

,

Nvidia

and

Qualcomm

among others. ARM-based chips are in iPads, iPhones, most Android phones, even Kindles.

Largely flying under the radar with consumers, the Cambridge-based company has got itself into a nice position, and it was one that even the might of Intel couldn’t conquer.

So the deal with ARM makes sense for Intel. It could lead to more business with Qualcomm and Apple, putting Intel at the heart of the mobile industry, a position it has tried – and failed – to reach under its own steam.

Intel is still a major player in the chip space. The company makes 80 per cent of the chips that run the world's servers, but rivals have designs on its territory. AMD, once considered a major rival for Intel in the server industry recently announced plans to downgrade its ARM chips and return to x86 chips.

As a major employer in Ireland, we have a vested interest in Intel's success. The company employs around 5,000 people in its plant in Leixlip, and has invested more than $12.5 billion (€11bn) in the facility over more than 25 years.

But not everything has been positive. Earlier this year the company announced it was cutting 11 per cent of its global workforce – 12,000 jobs – and some of that would be in Ireland.

Indirectly, the company also suffered a defeat when a case brought to the Supreme Court by farmer Thomas Reid against a compulsory purchase order by the IDA for his family's land, beside the Leixlip campus, was decided in favour of the farmer.

There is a bit of optimism though. Under chief executive Brian Krzanich, the company has been pushing into new markets. Keen to take advantage of the growing trend for the Internet of Things and to avoid a repeat of the mobile strategy fiasco, Intel has shown off chips that are the size of a button and could cost as little as $10.

The Irish operation has played a part in the design of these systems through its work on the Quark chip and the Gallileo board.

Strongholds

The cheaper chips won’t be as lucrative as the company’s former product strongholds. The Internet of Things only accounts for 4 per cent of the company’s sales, and with the cost per chip much lower than the PC or server business, it will take a lot of Internet of Things adoption for Intel to reach its previous heights.

That’s not all Intel is getting involved in. At the Intel developer forum, the company showed off a virtual reality headset that removes the wired connection to a computer and allows objects from the real world to be integrated in the digital. It uses an array of cameras and sensors that also allow the user to move throughout multiple rooms and interact with objects.

“Project Alloy takes the cord off the VR headset,” said Mr Krzanich. “To me that’s what virtual reality means.”

The design is set to be open-source material, so developers can put their own spin on it.

Intel is making the right noises at least. The Internet of Things is expected to grow to more than 30 billion devices by 2020, about treble its size in 2015. Getting in there early will – hopefully – stop the mistakes of Intel’s mobile era repeating themselves.