Intel debuts new smartphone chip as mobile market consolidates

SAN FRANCISCO Mon Feb 25, 2013 10:58am IST

Showgoers visit the Intel booth on the first day of the Consumer Electronics Show (CES) in Las Vegas January 8, 2013. REUTERS/Rick Wilking

Showgoers visit the Intel booth on the first day of the Consumer Electronics Show (CES) in Las Vegas January 8, 2013.

Credit: Reuters/Rick Wilking

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SAN FRANCISCO (Reuters) - PC chipmaker Intel Inc (INTC.O) hopes its new smartphone processor will help it find a foothold in a mobile market coalescing around Apple AAPL.O>, Samsung Electronics (005930.KS) and Qualcomm (QCOM.O).

Intel says its latest processor for mainstream smartphones, dubbed Clover Trail+, delivers up to double the computing performance and three times the graphics horsepower of its first smartphone chip, which was used last year in devices sold in Europe, Africa, China and India.

Intel dominates the PC industry but shipments have been falling due to the growing popularity of smarpthones and tablets - markets the chipmaker underestimated.

The company has been rushing to catch up with Qualcomm, Apple and Samsung, which design chips with technology licensed from ARM Holdings (ARM.L).

The Santa Clara, California chipmaker has made progress improving the power-efficiency and computing power of its mobile processors.

The Clover Trail+ chips, built with two cores and launched ahead of Mobile World Congress in Barcelona on Monday, have been chosen by Lenovo (0992.HK) to power an upcoming smartphone for China, Intel said in a press release.

Intel's single-core Medfield smartphone processor was launched last year and have been used in 10 handsets across 20 countries, although the company's global market share in smartphone chips remains below 1 percent, according to Strategy Analytics.

After delays, Intel expects in the next few months to start shipping phone chips with Long Term Evolution, or LTE, a high-speed wireless technology already offered by Qualcomm and increasingly found in smartphones launched in the United States, including Apple's iPhone and Samsung's Galaxy S3.

Intel-powered phones with LTE, which allows for faster downloads of movies, songs and other content, could appear in stores next year.

CEO Paul Otellini has often described Intel's strategy for expanding into mobile as "a marathon, not a sprint", but the cut-throat market for smartphone chips increasingly appears to be a three-man race between Apple, Samsung and Qualcomm.

Samsung and Apple together accounted for 51 percent of the smartphone market in the December quarter, compared to 46 percent in the same period the year before, according to IDC.

Samsung manufactures processors for the iPhone and iPad on behalf of Apple and also increasingly makes its own smartphone chips. Top mobile chipmaker Qualcomm's stock market value overtook Intel's for the first time in November.

"The issue is the customer environment. Apple and Samsung make their own and the rest of the world has gone Qualcomm," said Stacy Rasgon, an analyst at Sanford Bernstein. "They (Intel) need LTE and they need to show that their products aren't just a little better. They have to be massively better."

In January, Intel announced a new processor platform, codenamed Lexington, targeted at low-priced smartphones in emerging markets like Latin America and Asia where Apple, Qualcomm and Samsung are less dominant and LTE is not a must-have.

With Wall Street increasingly worried about slowing PC sales and Intel's lack of market share in mobile, the chipmaker's stock has lost a quarter of its value over the past 12 months. (Reporting By Noel Randewich; Editing by Bernard Orr)

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