Intel Says Its Smartphones Won't Be Ready Until 2012

The world's largest chip maker is shopping around its phone design to other manufacturers following Nokia's change of plans and now says 2012 will be the year.

SANTA CLARA, Calif.-Intel found itself answering "no" to some important questions May 17 at the company's annual shareholder conference here on its Silicon Valley campus.

One of them addressed whether the world's largest processor maker would be coming out in 2011-as it had said last year and earlier this year-with new chips suited for smartphone use, a huge market the company has tried to sell into for years.

"I'm going to disappoint some of you; we're not going to have a big announcement on smartphones for smartphone customers today," Intel CEO Paul Otellini told a packed house of investors, partners, analysts and media types.

"You all know about the disappointment we had with Nokia [in the ill-fated MeeGo smartphone partnership] in the February time frame, when they decided to go a different route. We didn't sit down and mope after that. We took [back] the product that we had been working on with Nokia very deeply for several years almost exclusively-to the extent we didn't work with a lot of other customers. We have freed up those resources and turned that design into a form factor/reference design. We're shopping that now to a number of manufacturers ... and we've had good success.

"You'll see the first Intel-based phones [using new Medfield chips] in the market the first part of next year. In hindsight, Nokia was the wrong partner to have picked."

In February 2011, Finland-based Nokia-which has struggled to compete with Apple's iPhone and myriad other Android mobile phones-decided to cast its lot with Microsoft to build the Windows Phone 7, abandoning its years-long development partnership with Intel to build a phone called the MeeGo.

Breaking into Smartphones Has Been Problematic

For years, Intel has been unsuccessful breaking into the smartphone chip space because device makers have favored cheaper, lower-power ARM (Advanced RISC Machine)-based chips, such as Qualcomm's Snapdragon and others made by IBM, Samsung, Globalfoundries and ARM itself.

That led to another question to Otellini at the shareholder meeting-a rather obvious one: "Is Intel planning to build an ARM chip?"

"The short answer is no," Otellini said. "We did that, we have an ARM license; we have an ARM architecture license, for that matter. The important thing for us is how to get paid. We think the best thing for us to get paid in these new markets is to build best-of-class chips. It's not really the architectural core that makes the difference here; it's the stuff you put around it, like the other power management and other features.

"The IA [Intel Advantage] versus ARMs is that there is no power penalty that we pay. There's no advantage to be beholden to someone else, to pay royalties to them, which lowers our overall profits. We can do a better job if we filled out this continuum with IA. We have no intention to use our license again to build an ARM."

ARM 32-bit processors are low-cost chips used in more than 90 percent of mobile phones and myriad other handheld digital devices. Because the architecture is relatively simple, they work well in low-power applications.

In 2009, ARM processors accounted for about 90 percent of all embedded 32-bit RISC processors. They are used in mobile phones, media players, handheld game consoles, calculators and peripherals, such as hard drives and routers. Current ARM licensees include Alcatel-Lucent, Apple, Intel, LG, Marvell Technology Group, Microsoft, NEC, Nvidia, Qualcomm, Samsung, Sharp and Texas Instruments, among many others.

Intel President and CEO Paul Otellini addresses a full house at the company's 2011 investor's meeting in Santa Clara, Calif. (eWEEK photo by Chris Preimesberger)