Intel Corporation To Focus On Margins Now

Intel sold 46 million tablet chips last year, outperforming its own estimate of 40 million, but there is a minimal possibility the company will do this again. CEO Brain Krzanich mentioned during the fourth quarter earnings call on Thursday that the chip maker will take more interest in making money on mobile chips rather than shipping large volumes.

Intel to focus on margins

In 2014, Intel had to go through a lot before achieving a major milestone in the tablet segment, which is dominated by ARM. The chip maker was determined to sell no fewer than 40 million tablet chips and lured device makers into using its low-power Atom processor by offering grand subsidies. Although it earned the company many potential clients, it lost millions of dollars in the process.

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

In September, Krzanich acknowledged that the company will not offer another wave of subsidies to put Intel chips in smartphones. He reiterated similar words during the Thursday conference call, saying that the focus on tablet and phone chips will be on margins rather than volume.

“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.”

Winning major partners

There are reports that the tablet market is nearing maturity, and analysts are expecting flat sales or dropping growth. Krzanich mentioned that he cannot estimate tablet sales, but this year the company is not trying to grow at an increased speed, but rather, capture the market with an aggressive chip strategy.

This year Intel will focus on counterbalancing the losses from 2014 with new mobile chips code-named “Sofia.” These low-cost chips will be integrated into smartphones and tablets, shipping with a 3G modem initially and then with a 4G LTE modem.

Krzanich also mentioned that the company has won many major partners and OEMs, including some others. Among all the partners and clients, Lenovo and AsusTek are the most significant mobile device makers that supply handsets and tablets with Intel chips. Additionally, the chip maker has entered into partnerships with Chinese companies such as Rockchip and Spreadtrum to develop and sell its Sofia chips to bring down distribution costs and enhance profitability.