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Intel Corporation Message Board

  • wallisweaver wallisweaver Feb 24, 2013 8:16 PM Flag

    Qualcomm's Achilles' Heel

    Qualcomm has grown quickly into Intel's prime competitor in mobility and has even talked about moving into PCs although what has happened recently with the well-received Surface Pro and the panned Surface RT may discourage those efforts.

    Qualcomm is at the top of its game and sits triumphantly at the top of the smartphone food chain. It has had a significant lead in LTE and it should preview another round of very competitive products at MWC 2013.

    But unfortunately for Qualcomm and fortunately for Intel, Qualcomm has an Achilles' heel and that weakness is its dependency on the dwindling number of ARM foundries for state-of-the-art chips.

    This last year saw headlines such as:

    Qualcomm Criticizes TSMC for Inability to Make Enough 28nm
    Qualcomm blames TSMC for chip shortage
    TSMC Spurns Apple, Qualcomm Bids for Guaranteed Fab Capacity
    Apple, Qualcomm won't get to hog TSMC chip fab capacity

    While Qualcomm is now saying that the capacity problem has been essentially solved by getting additional production from Samsung, all is still not well.

    The fact that Qualcomm essentially only has 2 choices in getting its chip manufactured is an indication of the serious problems in the fabless model as evidenced by shrinking numbers of foundries and shrinking funding for expansion. This problem is simply not going to get any better due to the immense cost of fabs and the R&D needed to support a foundry operation.

    Second, there continues to be a bottleneck at 28nm. This is the most advanced node available to the ARM world and there will be a lot of demand by many players at this level. Whether 2 foundries can meet this demand is still a significant unknown. A stumble by either foundry would send the ARM world and Qualcomm spinning out of control. And as Apple has found out, it's not such a great situation to have a foundry that also competes against you as Samsung does with its foundry customers.

    And then there is the fabrication competition. Intel is already at 22nm and will be at 14nm by the end of the year. It's expected that ARM will have 20nm production in a couple of years but it will be a long time in arriving and limited in its improvements as it is planar as opposed to the FinFET technology that Intel has transitioned to.

    The bottom line is that the entire ARM world including Qualcomm will be substantially at 28nm for several years and Intel will have at least a couple of years with a two process node advantage - their FinFET 14nm going up against ARM's 28nm planar. This is a very serious competitive advantage for Intel and will hamstring Qualcomm as they attempt to maintain market share in face of a competitor who simply will have much superior technology.

    And finally Intel will have immense manufacturing capacity, making shortages unlikely. Here too the risk is much greater on the Qualcomm side.

    In conclusion, it appears that Qualcomm's Achilles' heel will make it difficult for them to remain at the top of the smartphone food chain, regardless of their performance in design and micro-architecture.

    Sentiment: Strong Buy

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