Intel Corporation (NASDAQ:INTC) is world’s second largest supplier of microprocessors for tablets, claims CEO Brian Krzanich. The company has made an impressive comeback as only last year Intel’s role in the tablet market was on the verge of extinction. Krzanich boasted that Intel is only behind Apple in the tablet market.
Intel’s strategy working
The chip maker failed to match ARM holdings chips for the smartphones, citing which the company said that it will fund its chips with “contra revenue” by paying tablet makers to use their Intel processors. Intel made a point that the payment would overshadow the added costs from manufacturers, when they adopt the Intel processors. This is how Intel has managed a turnaround. Intel has planned to discontinue these payments eventually in 2015, when its technology would become more cost competitive.
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According to a research firm, Strategy Analytics, who gave the base of Intel’s Number 2 claims, said that the tablet shipment of the company increased two-fold in the second -quarter compared to the first three months of the year, overshadowing Qualcomm.
Subsidizing eroding profits for Intel
The strategy adopted by the company seems to be working, when the performance of the company is measured by volume rather than a profit. During its annual developer’s conference this week in San Francisco, the company reaffirmed that it is targeting to sell 40 million tablet processors this year.
Analyst Michael McConnell of Pacific Crest securities is estimating that the tablet market share of Intel would increase 15% to 17% this year. However, every subsidised chip sold by Intel erodes the bottom line. According to McConnell, Intel witnessed a decline of 16 cents in its mobile business in the second-quarter, which totals to a loss of $800 million. The company posted $2.8 billion in profits last quarter.
More efficient Core M Processors
The chip maker launched its most efficient processor Core M CPUs at IFA Berlin, a global trade show for consumer electronics and home appliances held only last week. Intel aims to boost the PC demand by launching this processor. According to the company, this processor will give the freedom to the manufacturers to design world’s thinnest laptops and the highest performance tablets 2-in-1 device. As claimed, the Core M processor offers up to 50% faster computer performance, 40% faster graphics performance and 20% longer battery against previous generations of Processors.