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I think this article misses the point: Intel has nothing to gain by entering the commodity smartphone processor market. The margins are slim, and therefore does

by krapht 9y ago

I think this article misses the point: Intel has nothing to gain by entering the commodity smartphone processor market. The margins are slim, and therefore doesn't make good use of Intel's advantage in semiconductor fabrication. Serial performance is important in processors, and as long as Intel is king in this area, they will have a home in server racks and workstations. I keep hearing about how cheap arrays of ARM processors will take over the world, but I'll believe the easy parallel programming unicorn has arrived when I see it. It seems more likely to me that when this is the case, a move to GPUs, FPGAs, or custom accelerator card would make more sense.

Athas 9y ago
In the short run, you are correct. However, by looking at history, it seems that the high-end chip manufacturers always end up being replaced by the low-end manufacturers, as the focus on cheap, small, low-power designs end up providing various strategic advantages (and raw revenue for product development). That's how Intel replaced the various RISC manufacturers in the 90s. Of course, the field is young enough that this has only happened two or three times, so it may just be a coincidence. Still, I like the thought of ARM chips replacing Intel in ten years, and twenty years later ARM being replaced by whoever currently makes the chips for those musical greeting cards.
- sah2ed 9y ago
  Exactly -- the key thing is the historical cost structures of the high-end makers makes low-end chip making highly unattractive which was why it was easy for Paul Otellini to say no to Apple to make chips for the iPhone. In the end, low-power chipmakers like ARM have no where else to go but up -- they can slowly move up-market and over time, enjoy the same high margins but at much lower costs relative similar to entrenched players like Intel.
product50 9y ago
So why are they considering acquiring Broadcom?
- oblio 9y ago
  To leverage their synergies.
  - hawkice 9y ago
    To be fair, that is the response to all 'Why is X acquiring Y?' questions, and it's a terrible answer. M&A is hard to do right -- most fail, and a staggering percent have all the surplus delivered to the seller instead of the buyer. See: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/where-mergers-go-wrong https://www.mckinsey.com/business-functions/strategy-and-cor... The real answer would speak to why (Intel thinks) this deal is not like the average, unsuccessful deal, and specifically why they would be able to use Broadcom's assets better than Qualcomm. The answers here probably have something to do with datacenters and energy/heat efficiency gains when you stop being fabless, something to do with anti-trust avoidance (qualcomm is limited by anti-trust concerns much more than Intel is, without those limits the value goes up), and something to do with cost and workflow concerns. Intel has a substantial risk to their current model, which is already hitting something of a natural ceiling of cost per manufacturing facility, driven largely by precision requirements -- that ceiling is what stopped Moore's law, I think, because no one can build a facility that costs even more money than Intel -- and developing business processes that can deliver classic Intel improvements in a more fabless or fabless-friendly process could reduce that risk. This is all pure guesswork, but I think it gets closer to the actual discussions inside the companies.
    - oblio 9y ago
      It was just a joke, based on the usual wooden speak of these announcements. I don't know which acquisition is better. I do think that Intel should probably enter the ARM, somehow, just to hedge their bets.
      - Someone 9y ago
        Again (https://en.wikipedia.org/wiki/XScale https://en.wikipedia.org/wiki/XScale)? They gave up on that to focus on low power x86 CPUs. Intel has an architectural license for 32-bit ARM (https://en.wikipedia.org/wiki/Arm_Holdings#Arm_architectural_licensees https://en.wikipedia.org/wiki/Arm_Holdings#Arm_architectural...), so they could design their own micro-architecture whenever they want to. I don’t know whether they have one for 64-bit ARM, but they have money, so I expect it wouldn’t be difficult to get one.
deepnotderp 9y ago
I'll argue the opposite, the low end mobile market will be fantastic for Intel precisely for that reason. If margins in mobile are razor thin, then Intel can make bigger margins than anyone else by owning the fabs. And mobile's volume can justify owning fabs.

by krapht 9y ago

Athas 9y ago

In the short run, you are correct. However, by looking at history, it seems that the high-end chip manufacturers always end up being replaced by the low-end manufacturers, as the focus on cheap, small, low-power designs end up providing various strategic advantages (and raw revenue for product development). That's how Intel replaced the various RISC manufacturers in the 90s. Of course, the field is young enough that this has only happened two or three times, so it may just be a coincidence. Still, I like the thought of ARM chips replacing Intel in ten years, and twenty years later ARM being replaced by whoever currently makes the chips for those musical greeting cards.

sah2ed 9y ago
Exactly -- the key thing is the historical cost structures of the high-end makers makes low-end chip making highly unattractive which was why it was easy for Paul Otellini to say no to Apple to make chips for the iPhone. In the end, low-power chipmakers like ARM have no where else to go but up -- they can slowly move up-market and over time, enjoy the same high margins but at much lower costs relative similar to entrenched players like Intel.

product50 9y ago

So why are they considering acquiring Broadcom?

oblio 9y ago
To leverage their synergies.
- hawkice 9y ago
  To be fair, that is the response to all 'Why is X acquiring Y?' questions, and it's a terrible answer. M&A is hard to do right -- most fail, and a staggering percent have all the surplus delivered to the seller instead of the buyer. See: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/where-mergers-go-wrong https://www.mckinsey.com/business-functions/strategy-and-cor... The real answer would speak to why (Intel thinks) this deal is not like the average, unsuccessful deal, and specifically why they would be able to use Broadcom's assets better than Qualcomm. The answers here probably have something to do with datacenters and energy/heat efficiency gains when you stop being fabless, something to do with anti-trust avoidance (qualcomm is limited by anti-trust concerns much more than Intel is, without those limits the value goes up), and something to do with cost and workflow concerns. Intel has a substantial risk to their current model, which is already hitting something of a natural ceiling of cost per manufacturing facility, driven largely by precision requirements -- that ceiling is what stopped Moore's law, I think, because no one can build a facility that costs even more money than Intel -- and developing business processes that can deliver classic Intel improvements in a more fabless or fabless-friendly process could reduce that risk. This is all pure guesswork, but I think it gets closer to the actual discussions inside the companies.
  - oblio 9y ago
    It was just a joke, based on the usual wooden speak of these announcements. I don't know which acquisition is better. I do think that Intel should probably enter the ARM, somehow, just to hedge their bets.
    - Someone 9y ago
      Again (https://en.wikipedia.org/wiki/XScale https://en.wikipedia.org/wiki/XScale)? They gave up on that to focus on low power x86 CPUs. Intel has an architectural license for 32-bit ARM (https://en.wikipedia.org/wiki/Arm_Holdings#Arm_architectural_licensees https://en.wikipedia.org/wiki/Arm_Holdings#Arm_architectural...), so they could design their own micro-architecture whenever they want to. I don’t know whether they have one for 64-bit ARM, but they have money, so I expect it wouldn’t be difficult to get one.

deepnotderp 9y ago

I'll argue the opposite, the low end mobile market will be fantastic for Intel precisely for that reason. If margins in mobile are razor thin, then Intel can make bigger margins than anyone else by owning the fabs. And mobile's volume can justify owning fabs.