Intel reportedly is ending its efforts around some chips aimed at smartphones and tablets as part of larger strategy to shift to areas that promise more growth.
The chip maker, which last week announced it is cutting 12,0000 jobs and refocusing its efforts around such markets as the data center, Internet of things (IoT) and the cloud while reducing its reliance on PCs, is shelving its planned SoFIA and Broxton Atom chips for mobile devices. The SoFIA LTE and Broxton chips had been delayed but were most recently scheduled to be released this week.
Intel had been late getting the systems-on-a-chip (SoCs) to the market, and there were reports that companies like Asus—which uses Intel processors in its ZenPhone smartphones—were lessening their dependence on the Intel products and turning more of their attention to ARM-based SoCs from the likes of Qualcomm.
In a column on Forbes.com April 28, Patrick Moorhead, principal analyst with Moor Insights and Strategy, wrote that during a meeting senior Intel officials told him that they were ending their SoFIA projects—SoCs with integrated 3G and 4G wireless modems—and the Broxton chips for smartphones and tablets. The goal is to free up resources for Intel’s efforts around modems and 5G, Moorhead wrote.
“Intel has been showing some serious commitments to 5G deployment and penetration in the future, and they clearly believe that 5G is their opportunity to carve out a competitive advantage for themselves end to end in the future of mobility and in connecting the growing number of smart and connected ‘things’ to the cloud,” he wrote. “From my vantage point, Intel has a better chance in 5G than they do in low-end 4G mobile devices.”
Wells Fargo analyst David Wong, after attending a meeting with Intel Chief Financial Officer Stacy Smith, sent a note to clients saying that he expected there would be restructuring around the chip maker’s smartphone and tablet initiatives. Many of the projects impacted by the cost cuts and shifting priorities would come from Intel’s Client Computing Group (CCG), which includes PCs and mobile devices, Wong wrote, according to Barrons.
“Within CCG, Intel plans on scaling back its investment in tablet and smartphone SoCs [system-on-a-chip]—we assume this refers to a reduction in investment in the SoFIA product line,” he wrote.
Qualcomm is the dominant player in the 4G, and Intel, after being slow initially to respond to the rise of smartphones and tablets, has struggled to gain traction in the space. Intel has spent billions over the past several years on its mobile chip efforts with little to show for it.
In a post on the company blog April 26, Krzanich outlined the company’s strategy going forward, which was built on five core beliefs around the cloud, the IoT, memory and programmable chip technologies, 5G and the continued strength of Moore’s Law. Connectivity is the key to all these areas, the CEO wrote.
“The fact [is] that providing computing power to a device and connecting it to the cloud makes it more valuable,” he wrote, pointing to autonomous cars as examples. “Connectivity is fundamental to every one of the cloud-to-thing segments we will drive. As the world moves to 5G, Intel will lead because of our technological strength to deliver end-to-end 5G systems, from modems to base stations to all the various forms of connectivity that exist today and will exist tomorrow.”
The PC and mobile units have been a focus of Intel’s in recent months. In November 2015, Krzanich hired Venkata “Murthy” Renduchintala, who came to the company from Qualcomm, to be president of the new Client and IoT Businesses and Systems Architecture Group.
Earlier this month, it was announced that two longtime Intel veterans—Kirk Skaugen, senior vice president and general manager of the CCG, and Doug Davis, senior vice president and general manager of the IoT Group—were leaving Intel. There also were reports that Aicha Evans, corporate vice president and general manager of Intel’s Communications and Devices Group, had resigned, though Intel never confirmed that and reports later in the month said she had decided to stay.