Intel May Exit Smartphone Market Next Year

“A rumor circulating in the upstream supply chain in Taiwan has Intel reportedly questioning whether it should quit the smartphone market in 2015 if it continues to see weak performance in its handset business in 2014,” reports Digitimes.

The report points out that Intel’s collaboration with Lenovo to put x86 chips inside Lenovo hand-sets has foundered.

Intel is up against an entrenched market leader, Qualcomm, and must realise how difficult it is to come from behind to take on a financially strong, technologically superior, No.1 in any market sector.

The mobile phone market is increasingly polarised between Apple/Samsung at the high-end and the Chinese at the low-end.

Apple and Samsung seem committed to using cores licensed from ARM which they can customise for their handset SOCs. Intel’s business model does not extend to making its cores available for licensing.

If a Intel is locked out of high-end hand-set manufacturers by its business model, and reduced to competing at the low end with its very high fixed costs, it is going to lose a bundle.

Intel is said to have lost $2.4 billion on mobile last year and plans to lose more this year as it pays mobile OEMs to use its chips.