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Intel has broad smartphone strategy

Chip giant intends to offer a full menu of silicon technologies for smartphones.

Intel plans to offer a broad selection of silicon technologies for smartphones, as it seeks to grab a part of German chipmaker Infineon.

Can Intel build silicon to rival--or surpass--future iPhones? That's the plan.
Can Intel build silicon to rival--or surpass--future iPhones? That's the plan.

Intel is on a mission: the world's largest chipmaker is virtually absent in one of the hottest digital device markets. And, as Apple has demonstrated with its iPhone and its own A4 chip, high-end smartphone technology is bleeding over into tablets, another hot market.

The circumstances for Intel couldn't be more different from the PC market, where it is too dominant, as the settlement with the Federal Trade Commission on Wednesday underscores.

So, what does Intel have to do to catch up with the dominant silicon players in smartphones, such as the Qualcomm and Texas Instruments? It will buy its way into the market if necessary, while moving its chip manufacturing technology forward at a blistering pace to squeeze more performance onto a smartphone chip than competitors by 2011 or thereabouts.

But first it needs more silicon technology. A requirement for any major smartphone chip supplier is to have not only the processor--referred to as an application processor--but also have a smorgasbord of connection options--such as 3G, 4G, Wi-Fi, GPS--for customers.

Enter Infineon's wireless unit, which Intel is making a play for in order to "fill that hole," according to source familiar with Intel's plans.

Or, if necessary, it can make the silicon itself. Intel is currently doing an "aggressive analysis on make versus buy," according to the source. Intel does not want to lose business in the future because it "doesn't have a certain kind of protocol," the source said. In other words, Intel wants to cover all of its connection technology bases.

And this is a long-range plan. Intel is slated to bring out a smartphone-centric chip called Medfield by early next year that squeezes what is now two pieces of silicon into one chip, using Intel's most advanced 32-nanometer manufacturing technology. This will be the first step. After Intel gets the Medfield application processor into smartphones, then it will progress to further integration beyond Medfield.

"Take the category of handhelds and draw a pyramid. Initial products will be aimed at the top end of that pyramid, which is the iPhone category where an integrated application processor isn't required. But to go down that pyramid into that feature phone where there's more and more (market) volume (and) you're going to have to have that level of integration," according to the source.

Should the competition be worried? Maybe not yet but no one should underestimate Intel's ability to build competitive chips, whether they be for PCs or smartphones. "It can't be only incrementally better silicon. You have to have substantially better silicon to unseat the incumbent," the source said.

An Intel spokesperson declined to comment for this report, saying "We cannot comment on rumors or speculation."