Intel wants to bring its advanced chip-making technologies into the fast-growing market for mobile phones and PDAs (personal digital assistants), building on the company's core strength in desktop processors. Despite its late entry into the market dominated by Texas Instruments Inc. (TI), Qualcomm Inc., and Motorola Inc., analysts agree that once Intel gets its advanced manufacturing technologies and marketing machine behind its forthcoming Manitoba chip, the company will carve out a space in this fast-growing market.
Intel's theme for this year, outlined in September at its Fall Intel Developer Forum in San Jose, California, has been the convergence between computing and communications devices.
"Computing devices are communicating more, and communications devices are computing more," said Mark Miller, an Intel spokesman. "As phones with color screens and video become mainstream, these phones will need more flash memory and computing capability."
This shift in mainstream mobile phone usage from voice-only handsets to units with voice and data capabilities is expected to take place toward the end of 2003 or beginning of 2004, analysts said. Advanced phones are already common in Japan and some parts of Europe, but the U.S. market is behind the rest of the world, and provides a significant growth opportunity.
Intel, based in Santa Clara, California, is taking tentative steps toward the mobile device market with its current XScale chips, the PXA210 and PXA250. They are designed for the PDA market and build on the company's older StrongArm chips for mobile handheld devices. The PXA250 is a high-end chip that runs at clock speeds of up to 400MHz, while the PXA210 tops out at 200MHz.
The company recently announced the next line of XScale chips, the PXA261 and PXA262, which were announced on Oct. 15 at an Intel Developer Forum (IDF) in Taiwan. These chips are targeted at mobile phone manufacturers, and shipping in sample volumes now. They will be out in production volumes in the first quarter of 2003, Miller said.
The next Intel XScale processor used in a mobile phone will be the first one, according to several analysts. Several XScale chips have made it into PDAs such as Hewlett-Packard Co.'s iPaq and Dell Computer Corp.'s new Axim, but mobile phones remain the domain of other manufacturers.
The company is looking for that trend to change with Manitoba, the next version of its XScale chips. Manitoba is the result of a project to bring the CPU (central processing unit) and the DSP (digital signal processor) onto a single piece of silicon, and stacking flash memory atop that chip. This would allow device manufacturers to create smaller and more powerful phones.
By putting the DSP chip, which clarifies audio signals, on the same piece of silicon as the main application processor, mobile phone designers can reduce the size of their handsets. But Intel's plan to bring those two chips together on one piece of silicon is not a new technology, and its tardiness in developing such a design will hurt its initial entry into the market, said Mario Morales, vice president of semiconductors at market research firm IDC in Mountain View, California. (IDC is a division of International Data Group Inc., parent company of IDG News Service.)
Rival chip maker TI already sells a chip with a combined CPU/DSP, its OMAP (open multimedia applications platform) processor. TI, based in Dallas, has been selling OMAP processors since late 2000, and Motorola also has CPU/DSP technology in its i250 and i300 processors, Morales said.
Specific details about Manitoba will be released when the chip launches in the first quarter of 2003, Miller said. It is expected to find its way into handsets by the end of 2003, he said.
In 2001, TI held about 19 percent of the revenue in the worldwide cellular baseband and radio semiconductor market with its OMAP processors, according to IDC. The continued acceptance of Qualcomm Inc.'s CDMA (code division multiple access) processors puts the San Diego, California, company in second place with 18 percent of the revenue, and Motorola was third with 14.9 percent.
Despite the uphill battle for Intel, analysts agree the company is merely a late bloomer in the cellular processor market, and will eventually make its presence felt in the market.
"Intel has the greatest semiconductor manufacturing capability, plus billions in cash. They're just not there yet," said Tim Strauss, principal analyst for Forward Concepts Co. in Tempe, Arizona.
"When companies are eventually shipping billions of these handsets, the people who own the factories will be able to provide the lowest costs. Those who use foundries will need to have a markup somewhere along the line. That's Intel's plan, to be able to outmanufacture everybody else," Strauss said.
Just the fact that Intel will have a presence in the market will force mobile phone companies to evaluate its technology, said Peter Glaskowsky, editor-in-chief of the Microprocessor Report in San Jose, California. "Most companies know they would have to consider Intel, even if they know right now that Intel wouldn't offer them much," he said.