Is there even room for Intel?
The two biggest smartphone vendors, Apple and Samsung, prefer to use their own chip designs based on ARM architecture in their phones. Occasionally, Samsung will make an exception (see: U.S. Galaxy S4), but Apple is about as closed a system as it gets. Still, Qualcomm was able to capture 43% of the smartphone processor revenue share in 2012. Apple and Samsung combined for 27% of the market, although that number is skewed due to vertical integration. The point is, there’s a good chunk of the market that’s wide open for competition.
Furthermore, shifts in the smartphone market happen very quickly. For instance, Texas Instruments Incorporated (NASDAQ:TXN) was nearly even with Qualcomm in terms of market share in 2010. Now, the company isn’t even trying to compete, halting investment in the market in the fourth quarter of 2012.
With smartphone vendors redesigning phones and making new phones every year, they’re constantly trying to maximize the balance between dollars, performance, and power use. I believe Intel’s next generation of chips will provide high-end phone makers with an excellent value proposition.
A growing market
In 2012, the smartphone application processor market totaled $12.9 billion in revenue, while the baseband processor market reached nearly $18 billion. Combined, analysts believe the two markets could reach $50 billion in 2014.
Intel is setting up to capture a significant chunk of that $50 billion market in 2014. 2012 was the year Intel caught up with the competition’s capabilities, 2014 is the year it takes the lead and starts to take away the competition’s market share. After that, Intel’s leading edge technology ought to help that market share continue growing.
The article Intel’s Smartphone Opportunity originally appeared on Fool.com and is written by Adam Levy.
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