Intel given big break in mobile chips challenge - Financial Times

Samsung Electronics will use an Intel processor in the latest model of its popular Galaxy tablets, an important breakthrough for the world's biggest chipmaker by revenues in its quest to challenge the dominance of Arm-based chips in mobile devices. Samsung's Galaxy Tab 3, which is expected to go on sale this month, will be the first time the South Korean company has used Intel chips in its tablet computers. Previous versions of the Galaxy Tab used chips that are based on Arm Holdings' designs, though Samsung already makes PCs with Intel chips. The move will provide an early boost for new Intel chief executive Brian Krzanich, who took the helm last month. Mr Krzanich admitted to shareholders that "we were slow to the mobile market" and promised aggressive action to address this error. As mobile devices have eaten away at the market for personal computers, where Intel is dominant, the US company has come under pressure to develop a strong presence in the market for mobile application processors, but it has made little progress so far partly because until recently Arm-based chips were far more energy-efficient than those designed by Intel. Jasmeet Chadha, an analyst at Sanford C Bernstein, said that the contract was the single most important to date in Intel's mobile business. "Their previous wins have been from second- or third-tier players such as [Chinese phonemakers] ZTE or Lenovo," he said. Sector sales figures in the first quarter of this year demonstrated the urgency of the challenge facing Intel. Unit sales of tablets rose by 142 per cent year-on-year, and those of smartphones by 41.6 per cent, according to the research group IDC. By contrast, sales of personal computers declined 27 per cent. But its deal with Samsung reflects the progress Intel has made in reducing the power consumption of its chips, representing a growing threat to its FTSE 100 rival. Shares in Arm fell 7 per cent in London on Monday. Ian Thornton, vice-president of communications and investor relations at Arm, said Samsung's move was a reflection of a convergence in the market for PCs and large tablets, two areas traditionally owned by Intel and Arm respectively. "In the same way you are beginning to see Arm-based chips going into things that you could call PCs then similarly you are beginning to see Intel getting some share into things where you would expect an Arm based chip. "From our point of view that is fine. Diversity is good, that's what we try and bring to the industry." Samsung itself is one of the producers of mobile processors based on Arm architecture, and its decision to source these components from a rival comes after admissions that it is struggling to keep up with strong demand for its mobile devices. This had already provoked speculation that it would source memory chips, which it also makes, from its South Korean rival SK Hynix. Samsung's new Galaxy S4 smartphone sold 10m units within a month of going on sale on April 27, and its tablet sales increased 282 per cent in the first quarter from a year earlier. "In order to meet the demand from our vendor/carrier partners and provide a consistent high-quality experience for customers, Samsung has sourced components, including chipsets, from trusted partners," the company said. This article has been amended to reflect the fact that first-quarter unit sales of tablets rose by 142 per cent year-on-year Copyright The Financial Times Limited 2013. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFop0vTadhZqY64xi3a7U8Wz784FA&url=http://www.ft.com/cms/s/0/bf4e7e52-cc43-11e2-9cf7-00144feab7de.html

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