Intel is subsidizing Bay Trail

[s44]

Ugh, though I guess we all suspected it. Not just lower prices, but cash -- nominally for component and engineering costs.

I do think the chip has its place in the next few months, as Android vendors transition to 64 bit before the A57-based designs (or Project Denver!) are really ready. But it really could have made a splash over the holidays.

 

[Ravynmagi]

Yeah, the large number of budget tablets with Clovertrail or Clovertrail+ processors during the last few months has made me believe Intel must be subsidizing these things like crazy.

Though it's a good thing for customers. While I'm not a fan of Clovertrail in Android tablets, I do think it's probably better than the alternative like a Mediatek quad A7.

 

[s44]

Not just tablets and not just past months! The Asus budget phone line from CES is all Clovertrail+.

And yeah, that's way better than crappy Mediatek.

 

[poofyhairguy]

At some level this makes sense- Intel is playing catch-up. Clovertrail isn't a home run (as in it demolished the competition) so Intel has to lower the cost of the entire platform to get into the market.

I also think a lot of money is being dumped into Android- during the mobile show an Android 64 kernel running on an Intel CPU was discussed. I think Intel is basically paying for x86 Android development.

Honestly Intel has some hard choices to make going forward. As the article states they can't do this forever. Eventually Intel wants people to pay MORE for Intel CPUs (as they don't want to live on ARM-level margins) but they really need to give more tech value for the dollar to do that.

 

[BrightCandle]

All the companies making tablets and such are used to the ARM ecosystem and components now. Its going to cost them more to make an Intel based whatever at this stage. It makes sense to pay that additional cost so they can get the experience they need and see what your platform is capable of in the process.

Intel like most tech companies targets very high margin work only (Arm gets paid insane amounts as well) so it will only exist while the experience isn't there and they are breaking into the market. It probably wont reduce the price of the tablets themselves all that much however, just the additional development costs to the manufacturers.

 

[lagokc]

So is this subsidy why 8" quad-core Bay Trail tablets can be easily found for $250 with Windows 8.1 but it's still hard to find many tablets with AMD Kabini/Temash or did AMD actually not deliver on those processors despite them being launched months ago?

 

[Ravynmagi]

I think AMD's problem is they their performance is really horrible at the same TDP as Intel or ARM chips.

 

[Bateluer]

Standard behavior for Intel. :/

 

[senseamp]

SoFIA = Solicited FIA?
I don't see how this is a good long term strategy. Vendors will take the money, and they will make some Intel devices. But there is no loyalty with Android, it's a new design every year. As soon as the subsidies stop, they will kick Intel to the curb.
The only thing these subsidies allow Intel to do is tell investors they have high gross margins, when they are kicking most of those margins back to the vendor as marketing dollars.

 

[StrangerGuy]

Well, of course you will be subsidizing your chips when even a low-end ARM player like Mediatek has chips now that are good enough for anything Android that isn't a synthetic benchmark and they don't have 2 decades worth of monopolistic and predatory pricing practices. The performance argument is so overrated from the Intel will rule everything crowd.

 

[bearxor]

SoFIA = Solicited FIA?
I don't see how this is a good long term strategy. Vendors will take the money, and they will make some Intel devices. But there is no loyalty with Android, it's a new design every year. As soon as the subsidies stop, they will kick Intel to the curb.
The only thing these subsidies allow Intel to do is tell investors they have high gross margins, when they are kicking most of those margins back to the vendor as marketing dollars.

They're subsidizing the cost of additional components at this point, since the OEM's will need to purchase additional chips to make a complete package.

With Intel's next generation of chips, due in 2015, they will come integrated with that stuff on package (or die), including cellular, and the extra components won't be necessary. They're also targeting a price point $20-30 below what the current BOM is. With the requirement for all the extra stuff removed Intel should be in a good position come late 2015 to compete.

 

[senseamp]

They're subsidizing the cost of additional components at this point, since the OEM's will need to purchase additional chips to make a complete package.

With Intel's next generation of chips, due in 2015, they will come integrated with that stuff on package (or die), including cellular, and the extra components won't be necessary. They're also targeting a price point $20-30 below what current chips are selling for. With the requirement for extra stuff removed and chips that cost even less than they currently do, Intel should be in a good position come late 2015 to compete.

SOC's are now selling for $20-30. So if Intel is targeting $20-30 below that, they are going to be losing money.

 

[bearxor]

SOC's are now selling for $20-30. So if Intel is targeting $20-30 below that, they are going to be losing money.

Sorry, referring to the complete bill of materials and not just the actual SoC itself. Edited for (hopefully) much better wording.

 

[ninaholic37]

Even with SoFIA, though, Intel will make a significant concession: The chip will be manufactured not in Intel’s own fabs but by contract manufacturer TSMC. That reflects Intel’s need to get the product out quickly, said Nathan Brookwood, principal analyst with Insight64.

”When Intel looked at all the different pieces of [intellectual property] they would need for a low-cost, integrated part, many of them are available off-the-shelf at TSMC. They realized it would be easier just to port Atom to TSMC’s 28-nanometer process,” he said.

Really Intel? I guess it's all about $$$/dominance in the end...

 

[Ruiner1]

I guess we'll finally see how much that Intel fab advantage is worth as well, if Atom is made on the same process as everything else.

 

[lopri]

SOC's are now selling for $20-30. So if Intel is targeting $20-30 below that, they are going to be losing money.

I saw a report somewhere that estimated A7 for $17~18. S800 may cost slightly more than $20 but don't forget that includes an LTE modem.

I guess we'll finally see how much that Intel fab advantage is worth as well, if Atom is made on the same process as everything else.

The linked article says Intel will outsource TSMC.

 

[stlc8tr]

What other choice does Intel have?

Personally I think that Microsoft should have bombed the price of WP8 devices in order to gain market share and mind share. Instead they remain a distant third in a two horse race.

 

[lopri]

Splitting itself into a fab house and a design house is an option, in my uninformed opinion. ^^ I think we would see much faster improvements in AMD/NV's GPUs.

 

[tarlinian]

I saw a report somewhere that estimated A7 for $17~18. S800 may cost slightly more than $20 but don't forget that includes an LTE modem.



The linked article says Intel will outsource TSMC.

The A7's cost is rather irrelevant. It doesn't include the margin the chip designer would make. It's basically how much the foundry+OSAT (e.g., TSMC + AMKOR) charges per wafer divided by the number of yielding die/wafer. Qualcomm has to charge at least a 40% markup over that price in order to achieve the gross margins they have.

 

[Ruiner1]

The linked article says Intel will outsource TSMC.

Precisely. A lot of existing ARM stuff is made on TSMC 28nm, so we will now see Atom's real relative performance. Will the architecture be able to clock as high, or higher, and how the power consumption compares when using the same transistors.

It will be interesting to see.

 

[vi edit]

What other choice does Intel have? Personally I think that Microsoft should have bombed the price of WP8 devices in order to gain market share and mind share. Instead they remain a distant third in a two horse race.

Who do you really think is paying for those $50 Nokia 520/521's? Somebody is eating a chunk of that tab. That single phone accounts for 40% of all WP8 devices.

 

[R0H1T]

Who do you really think is paying for those $50 Nokia 520/521's? Somebody is eating a chunk of that tab. That single phone accounts for 40% of all WP8 devices.

Say what

At my place the 520 debuted at a price of 140~160$ (adjusting for exchange rates back then) & it has never dropped below 120$ even during the festive season last year so I dunno how you're saying that those uber expensive Windows devices are cross subsidizing the low end 520, since it is an avg specced phone at best & remember no Android on it so no M$ tax which most other OEM's (like HTC) have had to bear for quite a while now !