Qualcomm Says Tablet Chip Will Build Lead Over Intel

Qualcomm Inc., the largest seller of semiconductors for mobile phones, said it’s about to crack the tablet market, further distancing itself from rival Intel Corp. in wireless computing.

The company has begun selling upgraded versions of its Snapdragon processor line and anticipates the new chips will appear in 200 phones and tablets, said Raj Talluri, a senior vice president at San Diego-based Qualcomm. He didn’t provide a timeframe.

“You’ll see a whole bunch of tablets based on Snapdragon 800 in the market this year,” said Talluri. “There’s a lot of talk about Intel and tablets. Clearly we see them still being far behind in mobile.”

The two U.S. chipmakers are vying to win customers in wireless as the computing market, historically dominated by Intel, shifts to handheld devices where Qualcomm’s technology has become the industry standard. In tablets, both companies are chasing Samsung Electronics Co. and Nvidia Corp. Intel is ahead of Qualcomm, capturing the fifth spot with 6 percent market share, according to research firm Strategy Analytics.

Texas Instruments Inc. is bigger than both, though the company said last year that it’s leaving the market for smartphone and tablet processors.

Revised Design

Intel, the world’s largest chipmaker, said in May that it revised the fundamental design of its processors for mobile devices, to better cater to smaller gadgets. It’s also focused on more energy efficient chips to save battery life.

“We’ve noticed many of our competitors talking more and more about performance, which is ironic now that Intel is competitive on power,” said Bill Calder, a spokesman for Santa Clara, California-based Intel. As computing capability comes to phones and tablets, “a balance of overall platform power and performance becomes increasingly important. This is an area of Intel’s strength,” he said.

Qualcomm, meanwhile, is adding processing power to make the phones and tablets it runs more like laptops.

Neither company has made a dent in the other’s main business. Intel had less than one percent of the market for smartphone processors at the end of the first quarter, according to Strategy Analytics. Qualcomm-powered computers from Dell Inc. and Samsung have suffered price cuts or been removed from shelves.

Qualcomm’s advantage in tablets is that its technology combines processing, communications, video, graphics and other functionality onto a single chip without killing the battery, Talluri said. Intel doesn’t have that capability, while tablets like Apple Inc.’s iPad, powered by Samsung-made processors, split those functions among a number of chips.

‘Full Suite’

“The only one that’s doing that out there today is Qualcomm,” said Alex Gauna, an analyst at JMP Securities in San Francisco, who has the equivalent of hold ratings on Intel, Nvidia and Apple and a buy recommendation on Qualcomm. “It’s got the full suite of solutions.”

Qualcomm rose 1.3 percent to $62.65 at the close in New York, while Intel declined less than 1 percent to $24.15.

Intel reported second-quarter earnings today and Qualcomm is scheduled to report next week.

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