Intel Corporation (NASDAQ:INTC) is collaborating with China-based application processor designer Rockchip to venture into a new business model to launch new chip and solution design services. The chip maker is planning to start a wafer OEM business and will eventually focus on customized x86 chip products to make products for the emerging markets that will be more reasonably priced and competitive.
Intel running out of options
Intel is witnessing lackluster performance of PC market and excess wafer capacity, which can only be overcome if the company enters into the mobile product business. Rival chipmaker, ARM is ruling the mobile industry leaving Intel no choice, but to offer subsidies to its partners, which in turn hurt the profitability of the company along with its product positioning in the market.
Not just subsidies, but the chip maker is also curtailing its chip prices. However, most of the vendors still prefer ARM-based solutions as Intel solutions are not up to the mark, offering less flexibility and also have a cost disadvantage.
So, to overcome such hardships, Intel is interested in Rockchip’s software support and existing back-end component and channel relationships. According to Digitimes Research, Rockchip is partnering with Intel because of the severe competition between ARM powered products resulting in declining profit.
Other attempts from Intel
To make a place in the smartphone industry, apart from Rockchip, Intel also entered into a partnership with Sofia, whose variants are expected to be low on the cost. Intel-Sofia chip is expected to make a debut in the first-half of 2015 followed by a quad-core version of the chip. The company is advancing aggressively in the mobile segment, and Sofia is an important part of the plan, according to CEO Brian Krzanich.
“Sofia wasn’t even a product at this time last year. We’ve not only conceived the product, we’ve got both the 3G and LTE silicon back, both are functional,” Krzanich said. 3G Sofia chip could be a hit in the emerging markets whereas LTE version will be in demand in mature markets.
At present, Intel has two chips for the smartphone market, namely Merrifield and Moorefield, which are based on 22nm process. For the next year, the company is working on an Atom processor code-named Broxton for the high-end smartphones.
Apart from chips, Intel is making desperate attempts to break into the mobile industry with the help of new wearable. The latest obsessions of the company is charging bowl that is expected to arrive by year end.