Intel's bought a foothold in tablets, but now it wants to cut its losses

Intel shipped 46 million tablet chips in 2014, exceeding its goal of 40 million

Intel's Brian Krzanich during keynote at 2015 CES

Intel's Brian Krzanich during keynote at 2015 CES

Intel shipped 46 million tablet chips last year, exceeding its own goal of 40 million, but don't expect the company to make such a commitment again.

This year, the chip maker wants to focus on making money on mobile chips rather than shipping large volumes, CEO Brian Krzanich said during a conference call to discuss fourth-quarter earnings.

Entering 2014, Intel was still struggling to make its mark in the tablet market, which was dominated by ARM. Intel set a goal to ship 40 million tablet chips and enticed device makers to use its low-power Atom processors by heavily subsidizing the chips. The company was effectively buying its way into the tablet market, but it lost millions of dollars in the process.

"This goal was intended to establish Intel Architecture in the marketplace," Krzanich said.

Intel's aggressive plan was criticized by rivals like AMD, which said it would rather focus on high-margin products than low-end parts. In September, Krzanich said he would not repeat such a program to put more of the company's chips in smartphones, a market Intel is still trying to break into. He repeated that during the Thursday conference call, saying the focus for tablet and phone chips will be on margins, not volume.

The tablet market is maturing, and analysts have forecast flat sales or slow growth. Krzanich said he can't predict tablet shipments, but unlike in 2014, Intel will not try to grow faster than the market with an aggressive chip strategy.

"We don't need to go out and outpace the market for this year," Krzanich said. "A key goal for mobility is to improve profitability."

Intel hopes to offset losses from 2014 later this year with new mobile chips code-named Sofia. The Sofia chips -- which will be cheaper to produce -- will go into smartphones and tablets, shipping first with a 3G modem and then with a 4G LTE modem.

"We've got several design wins," Krzanich said. "All of our major OEMs and partners and plus some."

Lenovo and Asustek are the most prominent mobile device makers that ship handsets and tablets with Intel chips. Intel has also tied up with Chinese companies Rockchip and Spreadtrum to develop and sell Sofia chips, which should reduce distribution costs and improve profitability. Rockchip is making a quad-core variant of the Sofia chip for low-cost mobile devices.

In 2014, Intel's deep pockets and factories made it possible for the company to sell tablet chips at low prices, or even for free in some cases. Many low-cost tablets and phablets with Intel chips were made by little-known hardware makers in Shenzhen, China.

The tablet market will develop much like the PC market, with both low-end and premium tablets finding buyers, Krzanich said. People will pay US$299 to $399 "if you bring the performance and capability that's new and innovative," Krzanich said.

One example could be Dell's $US399 Venue 7 8000, which is as thin as a smartphone and has a 3D camera. It runs on Android and has an Intel Atom chip code-named Merrifield. Intel later this year plans to release new mobile chips code-named Cherry Trail, which will bring wireless charging and data transfers to tablets.

Intel may have achieved its goal in the tablet market, but challenges remain in the smartphone market. Only a handful of smartphones have Intel chips, and it will take years to overtake ARM processors, which are in more than 90 percent of handsets.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags business issuesintelfinancial results

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Agam Shah

IDG News Service
Show Comments

Cool Tech

Bang and Olufsen Beosound Stage - Dolby Atmos Soundbar

Learn more >

Toys for Boys

ASUS ROG, ACRONYM partner for Special Edition Zephyrus G14

Learn more >

Sony WF-1000XM3 Wireless Noise Cancelling Headphones

Learn more >

Nakamichi Delta 100 3-Way Hi Fi Speaker System

Learn more >

Family Friendly

Mario Kart Live: Home Circuit for Nintendo Switch

Learn more >

Philips Sonicare Diamond Clean 9000 Toothbrush

Learn more >

Stocking Stuffer

SunnyBunny Snowflakes 20 LED Solar Powered Fairy String

Learn more >

Teac 7 inch Swivel Screen Portable DVD Player

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Tom Pope

Dynabook Portégé X30L-G

Ultimately this laptop has achieved everything I would hope for in a laptop for work, while fitting that into a form factor and weight that is remarkable.

Tom Sellers

MSI P65

This smart laptop was enjoyable to use and great to work on – creating content was super simple.

Lolita Wang

MSI GT76

It really doesn’t get more “gaming laptop” than this.

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?