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Memo to FTC: Update your Intel dossier

The Federal Trade Commission needs to do a better study of the future of the chip market and Intel's likely diminished role.

The Federal Trade Commission needs to do a better study of Intel and chip the market before it pulls the trigger with a veritable scattershot of last-minute accusations.

In addition to the FTC's litany of charges against Intel relating to the chipmaker's alleged anticompetitive behavior in the central processing unit, or CPU, market for PCs, the FTC document also refers to "Intel's unfair methods of competition...and future competition in the relevant GPU (market)." GPUs, or graphics processing units, and CPUs comprise the two main processors in all PCs.

A more thoughtful, studied, and contemporaneous analysis by the FTC would reveal that future personal computing markets are not so much about graphics chips--which is the basis of its new found emphasis on Nvidia as the object of Intel bullying and misbehavior--but about small mobile devices. And here Intel faces a raft of competition and is at least a year behind its rivals.

And that includes Nvidia, whose tiny Tegra processor is already in the Microsoft Zune HD and the Samsung M1 and whose next-generation Tegra 2 chip will be in dozens more handheld devices and smartphones. Intel's current offerings in this space? Zero.

Nvidia's Tegra processor is based on the same ARM design that other competitors use such as Qualcomm, Texas Instruments, Samsung, Apple, and Freescale Semiconductor use. And which Nvidia's CEO Jen-Hsun Huang said is expected to account for half of Nvidia's business in a few years.

Unbelievably, the only reference to ARM in the FTC complaint is: "Another example of a non-x86 microprocessor architecture is ARM. ARM is used primarily in handheld devices and mobile phones." One sentence in a 20-plus page document seems oddly dismissive, as though ARM was practically irrelevant to future chip market competitive dynamics as relates to Intel. Especially when you look at it in the context that that FTC is referring to the world's most popular consumer chip architecture--that is, ARM.

How large is this exploding market today? The ARM processor market totaled well over 2 billion units shipped in 2008. The "x86" PC chip market, where Intel and Advanced Micro Devices compete, a fraction of this--a few hundred million.

"The growing market is...a whole swath of interconnected devices and Intel doesn't have much a presence there," said the CEO of ARM Warren East in an interview I had with him recently in Los Angeles. And he accurately asserted that ARM can either match or exceed Intel in market clout and spending because it works, to some extent, in concert with the manufacturers--like TI, Nvidia, Samsung--that collectively have a massive revenue stream to tap into for marketing and research and development. "Well, actually there's about $25 billion of ARM semiconductor revenue coming in through the front door. So, it isn't Intel versus ARM, it's Intel versus everybody else," he said.

And if there is any truth to the Google Netbook rumors, you can bet it will have an ARM processor inside, not an Intel chip. And that future Apple tablet (the object of more speculation than any device in recent history)? An ARM processor too, or at least an Apple-designed derivative thereof.

The point is that the future is not really about Intel processors and the company's alleged misbehavior in the PC market or, as the FTC sees it, graphics chips playing a larger role in PCs. Rather, the future is about the ARM architecture being implemented by virtually every large chip manufacturer on the planet for a dizzying array of personal computing devices.

And as the ARM chip design evolves and adds more processing cores (dual- and quad-core) running Google's Android operating system, Google's future Chrome OS, or even Apple's OS X, Intel will be the laggard not the leader.

The prospect of ARM moving into PC-like devices such as Netbooks (aka smartbooks) and laptops is real, too. Again, in these markets, Intel will find itself increasingly at a disadvantage as it faces vigorous and varied competition from formidable chipmakers such as Texas Instruments and Samsung, which are nothing like Advanced Micro Devices--portrayed as almost a Dickensian victim browbeaten to the edge of existence by Intel.