Intel Expects to Be ‘Big Player’ in Phones Within Five Years
Intel Corp. (INTC), whose chips are debuting in smartphones for the first time this week, expects to become a “big player” in the market over the next five years, following more than a decade of failed attempts.
“Intel doesn’t go into markets to be a small player,” Chief Financial Officer Stacy Smith said in an interview today at Bloomberg headquarters in New York. “It’s a billion-unit market, so there’s huge opportunity for us.”
Intel has announced five customer wins for its phone-chip designs, with the first device going on sale in India. The company is aiming to parlay its dominance in PCs -- where it has more than 80 percent of the market -- into orders for smartphones, which are increasingly taking on the functions of computers. In the past, Intel hasn’t been able to gain ground against wireless-chip rivals such as Qualcomm Inc. (QCOM)
This week’s debut means Intel is finally making headway in the market, Smith said.
“As of a week ago, we had zero share,” he said. “As of this week, it’s zero-point-something, because the first phones are selling.”
While phone chips won’t be material to Intel’s results in 2012, the company expects to have “meaningful sales” by next year at this time, Smith said. “And five years from now, we want to be a significant portion of the market,” he said.
Smith declined to quantify what would be significant for the Santa Clara, California-based company, beyond “a big number.”
Intel shares rose 2 percent to $27.86 at the close in New York. They have gained 15 percent this year.
India’s Lava International Ltd. became the first company to offer an Intel-based phone, rolling out a model called the XOLO X900 that runs Google Inc.’s Android software. Intel announced the partnership in February, saying Lava would sell both phones and tablet computers using its processors. The XOLO X900 went on sale in India on April 23.
France Telecom SA’s Orange, Motorola Mobility Holdings Inc. (MMI), Lenovo Group Ltd. (992) and China’s ZTE Corp. also plan to use the chips. Intel had previously announced partnerships with Nokia Oyj and LG Electronics Inc., but those deals didn’t result in phones coming to market.
Taking on Qualcomm
Qualcomm, based in San Diego, is the biggest maker of baseband modems -- the chips that connect phones to cellular networks. It also makes applications processors, which run the software on handsets. Texas Instruments Inc. (TXN) and Nvidia Corp. compete in the market as well.
Apple Inc. (AAPL), meanwhile, designs its own application processors, which are manufactured by Samsung Electronics Co. Intel is offering both application processors and baseband chips.
Mobile-phone shipments are estimated to reach 1.7 billion in 2012, a gain of 8.2 percent from 2011, according to IDC. Smartphone shipments, a subset of the mobile-phone market, will surge almost 34 percent, the research firm predicts.
That’s a faster pace than the PC market, which remains Intel’s main source of revenue. Worldwide PC shipments will increase 4.4 percent this year to 368 million units, according to Gartner Inc. (IT)