Intel to chip away despite legal issues

Intel will have to battle legal issues as it tries to makes its way into the mobile and graphics segments

The impact of FTC's actions could be "be less than expected," however, and courts may not be willing to force Intel to license modern x86 instruction sets, wrote Doug Freedman, an analyst at financial firm Broadpoint Amtech, in an research note this week.

At any rate, despite the big lead over AMD in the microprocessor market, Intel won't rest on its laurels. The PC market is growing at a slower rate than ever before, and Intel wants to establish a larger presence in markets like the mobile and embedded segments, Brookwood said.

"The challenge for Intel is to find ways to expand its markets in ways that don't necessarily get it in trouble legally," Brookwood said. Entering new markets has paid off in the past -- Intel introduced in 2008 the low-power Atom chip for netbooks, which was a runaway success. Netbooks accounted for around 20 percent of portable PC shipments this year, according to numbers released this month by DisplaySearch.

Intel has already committed $7 billion to revamping its manufacturing facilities to produce smaller, more integrated chips for use in consumer electronics. Smaller chips could help it enter new markets and create revenue opportunities, Intel has said.

The low-hanging fruit is in the mobile market, as the volume of chips that go into smartphones outpaces traditional CPUs that go into PCs, analysts said. Intel has a minor presence in the space with its Atom chips, and most smartphones today carry chips designed by rival Arm.

"The emergence of smart devices of all types -- smartphones, mobile Internet devices, embedded devices etc. -- are all prime territory for selling chips and Intel wants to be a player in an area where it has little share currently," Gold said.

With Arm's dominance, Intel can attack the space without much scrutiny from government agencies. Intel later this year will release a power-efficient smartphone chip codenamed Moorestown, which could heat up competition with companies that make Arm-based chips like Qualcomm, Texas Instruments, Freescale and Samsung.

Moorestown won't achieve the levels of power efficiency of Arm chips, but it could be a step ahead for Intel in developing lower-power, low-cost Atom chips. Intel needs more design wins so customers are convinced about the chip's performance. A handful of companies like LG Electronics are testing the chip, but have not promised to release devices.

Another market ripe for growth is graphics. Earlier this month, Intel delayed the release of the multicore Larrabee graphics processor, which would have been its first discrete graphics chip. Graphics processors are increasingly being used in high-performance computing, with companies like AMD and Nvidia offering chips with hundreds of cores to process math applications.

Scuttling Larrabee has cut Intel away from being competitive in that market. The company could try to make itself more competitive with AMD or Nvidia through acquisitions or internal development, said Ezra Gottheil, an analyst at Technology Business Research. The company is expected to share more information about Larrabee developments later in 2010.

More companies are adopting graphics processors suited to highly parallel computing environments. Oak Ridge National Laboratory plans to use Nvidia's upcoming Fermi graphics chips in a supercomputer for scientific tasks such as climate modeling. Intel's high-performance offerings include Xeon chips. The company is also developing an 48-core processor that could be applied to high-performance computing environments.

Nevertheless, Intel will be making many visits to court, and the company shouldn't let that distract it from executing its manufacturing and chip strategy.

"2010 could be a transitional year for Intel in that it really depends on what happens on the antitrust [side]," Olds said. "Or it could be the beginning of a long slog through all this stuff."

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