Intel attacking new markets with investments

Intel will invest $6 billion to $8 billion to make upcoming generations of chips

Intel on Tuesday said it would kick off manufacturing a new generation of chips late next year, opening up new markets and opportunities.

The company said it would invest between US$6 billion and $8 billion to manufacture upcoming generations of chips for PCs, smartphones, consumer electronics and embedded devices. A part of that investment would be applied to making chips using the new 22-nanometer process, resulting in faster and more power-efficient chips than those made using the 32-nm process.

Intel every two years employs a new manufacturing process, said Brian Krzanich, senior vice president and general manager of the manufacturing and supply chain division at Intel, during a conference call. Advances in manufacturing not only make chips smaller, but also drive raw system performance while using less power.

Beyond the PC market, the move to a new manufacturing process could help make Intel more competitive in segments like the smartphone market, Krzanich said. The power-efficient 22-nm chips could lead to faster handsets with longer battery life.

Intel has a slew of PC customers but has not demonstrated success in the handheld market, where it has virtually no presence, said Nathan Brookwood, principal analyst at Insight 64.

Intel offers an Atom-based chip code-named Moorestown for smartphones, which has not found many takers. The chip maker hopes the 22-nm process will help establish the low-power Atom chips in the smartphone and tablet segments, Brookwood said.

"Moving to 22-nm will help Intel provide smaller and more complete chips," Brookwood said.

The smartphone and tablet markets are currently dominated by chips based on Arm processors, which are considered more power-efficient than Atom chips. Arm licenses out processor designs to chip makers.

But the success of 22-nm Atom chips depends on the kind of feature set and battery life that devices deliver, Brookwood said. Intel has its work cut out to keep up with Arm, which is not standing still either.

Arm recently released its Cortex-A15 processor, which will perform faster than its predecessors. It will soon start demonstrating smartphone processors based on the 28-nm designs.

The first chips made using the 22-nm process will be microprocessors for computers, Intel's Krzanich said. Chips will be based on a microarchitecture code-named Ivybridge and will ship late next year, with products appearing early next year. Krzanich did not specify the types of products.

Intel's chips today power more than 80 percent of the world's PCs, and the company in recent years also started targeting new markets such as TVs, automobiles and embedded devices such as set-top boxes. The new manufacturing process will help Intel further pursue goals to establish new markets, which could help expand the company's revenue stream.

"The whole focus of this generation is to make microprocessors small enough, energy efficient enough to put it everywhere so we can connect everything and make devices smarter," said Intel CEO Paul Otellini in a television interview with Fox News on Tuesday.

The company is already supplying chips to a few customers in the TV and automotive industries. The company is supplying Atom chips for Sony's Google TV products, which include TVs and Blu-ray players, and also to Logitech, which will soon ship a set-top box called Revue to bring Google TV to televisions. Mercedes-Benz and BMW have also announced plans to use Intel's chips in cars for in-vehicle entertainment systems.

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