Note: If you're attending CTIA in San Francisco on Oct. 6-8 and would like to attend our Wireless Innovators dinner on Wed, Oct. 6 at the Four Seasons Hotel, please contact me for details at gerry.purdy@mobiletrax.com.

Intel appears to be on a buying spree, and its latest acquisition puts the company right in the mainstream segment of the mobile handset market.  Intel has been trying to promote their low power x86 Atom processor for mobile devices.  However, most mobile devices are utilizing ARM processors licensed through major firms such as TI.
 
Now, with the acquisition of the Infineon Wireless Services group for $1.4 billion, Intel gets ongoing relationships with handset makers and wireless operators, a profitable wireless chipset business, and (again) a license to the ARM processor.

This will be Intel’s second major attempt to build a business around ARM. In 1997, Intel acquired the StrongARM unit of Digital Equipment Corp., turning it into XScale. While the CPU was technically advanced, Digital Equipment (and therefore Intel) didn’t have ongoing customer relationships with handset makers and wireless operators.
 
After failing to achieve success in the mobile market, it sold the XScale unit on June 27, 2006 to Marvell along with the license to ARM.
 
Fast forward to August 2010.  Intel now regains access to ARM. But, this time, Intel gets ongoing customer relationships -- which could be very important to achieving success in the large mobile handset market.
 
Further, on September 15, ARM announced the new Cortex-A15 Mpcore processor that delivers a five times performance improvement over existing advanced SmartPhone processors, within a comparable energy consumption.  The ARM Cortext-A15 Mpcore will provide software support for  Android™, Adobe® Flash® Player, Java Platform Standard Edition (Java SE), JavaFX, Linux, Microsoft Windows Embedded and Symbian environments -- the leading platforms used in the mobile handset business.
 
Does this mean an end to the Atom processor family?  I suspect that Atom will end up being utilized more in both the tablet and wireless internet device markets, while ARM Cortext-A15 Mpcore processor will be utilized in the SmartPhone market.

Intel seems determined to become a major player in the mobile market.  The mobile handset market is 10 times as large as the notebook and PC market -- with roughly 3.5 billion mobile handset units being produced this year vs. 367 million notebooks & desktop PCs. The acquisition of Infineon could be one of the most important acquisitions Intel has ever made, especially if they end up successfully competing against TI and Qualcomm.
 
Finally, this story seems like a classic ‘make vs. buy’ argument for Intel.  They decided that it would be less expensive and provide faster time to market to buy Infineon than to build an equivalent business around ARM by itself.  Intel also gains a level of customer credibility in this space through the Infineon relationships that would have taken years to establish independently.
 
Kudos to Intel.  Now, let’s see what they do with the important asset they have acquired.
 

Written By:

J. Gerry Purdy, Ph.D.
Principal Analyst
Mobile & Wireless
MobileTrax LLC
gerry.purdy@mobiletrax.com
404-406-5309
 
Disclosure Statement: From time to time, I may have a direct or indirect equity position in a company that is mentioned in this column.  If that situation happens, then I’ll disclose it at that time.