Why Intel Corporation (INTC) Can’t Get Its Arms Around ARM Holdings plc (ADR) (ARMH)

Note, too, that Qualcomm and Broadcom don’t make chips, either. They order chips from foundries when they make sales. They don’t have Intel’s capital expenses. They are what are called “fab-less” chip companies, and the future of the chip business is fab-less.

Break Up Intel or Sell It

What I’ve suggested is that Intel break itself into two parts, a design house and a chip foundry. The design house would tweak Intel designs to the tastes of product vendors, with the vendors holding the additional intellectual property, and the chip foundry would make chips for anyone who asked, meaning they could even make ARM designs.

But this isn’t going to happen. It would go against everything in Intel’s corporate DNA. And Intel remains, despite a decade of stagnation, a huge company, 100 times bigger than ARM Holdings plc (ADR) (NASDAQ:ARMH) even now.

So last year, after standing on the sidelines and writing about this for too long, I finally took my own advice. I bought some ARM Holdings and sold out my Intel.

According to my bookie, whom for purposes of this piece we’ll call Charlie, the 100 shares of ARM Holdings I bought in late September are up about $1,300, over 40%. Since late September, Intel is down about $2 per share, so 100 shares of Intel would have lost $200.

Now maybe Hibben is right. Finally. Maybe Intel Corporation (NASDAQ:INTC) is about to squeeze out ARM chips the way it squeezed out IBM’s PowerPC a decade ago. Maybe the Wintel dynasty still has legs.

But I want to see proof before I trust Intel again.

The article Why Intel Can’t Get Its Arms Around ARM originally appeared on Fool.com and is written  by Dana Blankenhorn.

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