Intel's Haswell Hopes

TheStreet.com

NEW YORK (TheStreet) -- Four years ago my son and I were honored to cover the CompuTex show in Taiwan, which is now the only computer show that matters.

Back then we were hunting for "desktop Linux." We finally found it in a corner of a secondary show floor. That was back when Windows netbooks were all the rage.

The rage this year is Intel's Haswell, its new chip for notebooks and tablets. It follows by just a year the introduction of a similar chip, dubbed Ivy Bridge. Ivy Bridge introduced a new microarchitecture, Haswell a smaller die. The result is a low-power design whose circuit lines are just 22 nanometers apart.

Haswell is aimed at what Intel calls the "2 in 1" market, devices that double as tablets or notebook PCs, with 50 different designs in the pipeline.

The fate of these designs will determine whether the stock, which has risen to almost $25.50 on Haswell hope, continues to run or falls back. Since Intel has nearly 5 billion shares, the bounce of $5 a share from February's lows represents $25 billion in new equity value.

All this is aimed at ARM Holdings , whose low-power designs are licensed to device makers and now power the Apple line, among others. But Intel's problems go deeper.

Full disclosure. I did a little consulting for Intel a decade ago, in another lifetime, and the problem today remains what it was then. Intel sells chips it expects manufacturers to design around. Device makers design the chip around the product, and have a proprietary hold on the whole work.


Still, the new Haswell can run nine hours on a standard battery charge, with double the graphics performance of Ivy Bridge. The problem is the price, as high as $454 for the high-end Core i7 model. That's more than many devices cost these days.

The best news, however, is that Intel may finally be ending its dependence on Microsoft Windows. Samsung announced this week that an Intel chip will run the 10-inch version of its new Galaxy 3 tablets running Google Android, and the two are working on a mobile operating system called Tizen. It's not a total win -- Samsung still uses ARM designs extensively -- but it's a big step forward.

Intel is going after ARM with low-end Atom chips and high-end Haswell designs, hoping to squeeze it on both price and performance. But ARM still has an advantage in the middle of the market, which it sought to exploit at its own Computex press conference, as ZDNet reported.

The problem for ARM is that Intel is now focused on it as its main competitor, and so Haswell hope becomes ARM-ageddon. ARM shares opened on June 4 down 8% from their closing price of May 30. The stock has been downgraded by some investment houses, and three puts have been bought for every one call over the last two weeks, according to Schaeffer Research.

Just don't confuse what's happening in the stock market with what's happening in the marketplace. ARM is down because of its valuation - its market cap is 33 times its annual sales - and so even the small scare of Intel's press announcement was enough to blow it down a bit.


The question is whether Intel has what it takes to squeeze ARM out completely. New CEO Brian Krzanich has gotten a foot in the door at Samsung with Haswell. If President Renee James can use his roadmap to get a foot in the door with Apple, and then blow through that door because Apple's ARM chips are made by Samsung, Haswell hope could become market reality.

But not before.

At the time of publication, the author was long AAPL and GOOG.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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