Intel lost $1bn on mobile in Q3 '14

[Intervenator]

Seems to me they don't prioritize profit at this point in time. They are selling chips for basically nothing to grab market share from competitors. Just think, Intel has the majority of the profits from PC Client and Servers that they can invest into mobile. Sure, they'll lose some $ short term, but I think Intel sees this as a long term investment. They're playing for the war, not the battle. Competitors rely on mobile SoC revenue. Making no money at the cost of the competitions bottom line and market share seems like a good deal especially if it drives them out of the SoC segment. They can always monetize later.

Similar topic, but I would like your thoughts... Why isn't Intel making Apple's SoC instead of TSMC / Samsung? Surely they both have something to gain. Intel gets a solid revenue boost, as well as preventing their greatest fab adversaries from making $ they desperately need to continue improving their fab process... And Apple gets a bleeding edge 14nm SoC, something nobody else has. What's the deal? I heard Apple likes to be in control of their suppliers, and they feel they can not get this from Intel. Seems like a weak argument at best. Is it because they'll be supporting the ARMy? Because Apple is NOT going anywhere any time soon. Might as well monetize a mountain rather than try to topple it. It just seems like a half solution is better than no solution at all...

Just my take. I am by no means an expert in this field. Opinions?

 

[TechFan1]

I wonder if we'll finally see the moore's law radio come to fruition with the xmm 7460. I've never heard anything more about it since IDF 2012.

 

[Khato]

Similar topic, but I would like your thoughts... Why isn't Intel making Apple's SoC instead of TSMC / Samsung? Surely they both have something to gain. Intel gets a solid revenue boost, as well as preventing their greatest fab adversaries from making $ they desperately need to continue improving their fab process... And Apple gets a bleeding edge 14nm SoC, something nobody else has. What's the deal? I heard Apple likes to be in control of their suppliers, and they feel they can not get this from Intel. Seems like a weak argument at best. Is it because they'll be supporting the ARMy? Because Apple is NOT going anywhere any time soon. Might as well monetize a mountain rather than try to topple it. It just seems like a half solution is better than no solution at all...

From what I've heard it's because the pricing structure for Apple's fab business is a bit of a blood bath. Which is again a point of long term strategy rather than short term gain - both Samsung and TSMC want Apple's business in order to support continued investment in capacity and process development... and they're both willing to negotiate extremely good rates for Apple in order to get it.

 

[Intervenator]

Makes sense.

 

[AtenRa]

Just a follow up for my post #120

Directly from the wolfs mouth

http://seekingalpha.com/article/246...y-conference-transcript?page=2&p=qanda&l=last

Brian Krzanich - CEO
I don’t know if it’s as much the balance sheet; it does cost a couple of billion dollars now to generate one of these technologies. I definitely think you have to have scale. One of the things you have seen as Moore’s Law has gotten harder is you have to have scale. I mean just the economics of shrinking the die in half you have to have enough die to produce to keep a factory full. And if you’re shrinking them in half every two years you got to have enough die, enough growth to keep your factories full. So you need scale. I’d say scale is the number one thing that you have to have.

Well, that sums it up nicely I believe

 

[Roland00Address]

For a hypothetical conversation. Why is it not in intel's best interest to sell mobile chips at cost as long as more mobile chips translates into more internet devices which translates into more xeon sales (google, facebook, internet support etc)? As long as mobile is at cost or a small profit more mobile means more xeons. Selling mobile chips cheaply so they are now affordable in growing markets (parts of asia, africa, certain american countries etc) means more users and more users mean more xeons.


So what I am saying is as long as Intel is the high end cpu leader and has the vast majority of marketshare for server cpus. And as long as said server cpus bring in high margins it can in some situations make sense to have a department which does not make them money but allows other departments to make them money.


For example Google makes squat on Android development, yet more Android means more google advertisement and search dollars.

 

[Khato]

For a hypothetical conversation. Why is it not in intel's best interest to sell mobile chips at cost as long as more mobile chips translates into more internet devices which translates into more xeon sales (google, facebook, internet support etc)? As long as mobile is at cost or a small profit more mobile means more xeons. Selling mobile chips cheaply so they are now affordable in growing markets (parts of asia, africa, certain american countries etc) means more users and more users mean more xeons.

That's part of it. As per AtenRa's post, the other part is that a break-even part still drives volume through the fab which is a net gain in terms of covering the fixed cost of the process. Then the last piece of the puzzle is that MCG currently is shouldering the cost of quite a bit of IP (atom cores, graphics derivatives, SoC designs) which are then re-used by PEG and DCG.

Also, there's the simple fact that it is a long term strategy. As I've said all along, the primary strategy goal for Intel is to deprive the competitive of the revenue necessary to keep pace. That's how they win. (Which ties in to that bit about Samsung and TSMC fighting against one another for Apple's business - Intel's happy to sit that out because they're merely hurting one another in the process. Now once one or the other is knocked out of the race, yeah, that's when you'd see Intel aggressively pursue Apple's foundry needs.)

 

[Idontcare]

Just a follow up for my post #120

Directly from the wolfs mouth

http://seekingalpha.com/article/246...y-conference-transcript?page=2&p=qanda&l=last



Well, that sums it up nicely I believe

Couldn't agree more with BK. He's dead-on correct.