Intel's tablet processor challenge: Competing on the low end

Should Intel chase the entry level tablet market it will run into the aggressive pricing of Chinese rivals such as Rockchip, Allwinner and Amlogic, according to IHS.

The tablet processor market is expected to grow 23 percent in 2014 and Intel is poised to make a run courtesy of its Bay Trail chips, according to IHS Technology. The problem: Intel will have to battle Samsung and Qualcomm as well as a bevy of Chinese commodity chip makers.

Intel plans to grow tablet volume from 10M to 40M in 2014

Tablet processors are expected to hit 299.7 million units in 2014, up 23 percent from 2013. Tablet processors should top 400 million units by 2016, said IHS. And guess where that growth will come from? Entry level tablets.

At the high-end of the tablet market, the players are well known. Samsung and Qualcomm along with Nvidia are the major players.

But it's the low end of the tablet market that's worrisome, according to IHS. Rockchip, Allwinner and Amlogic---three Chinese chipmakers supplying processors for tablets as low as $50---are key players in the entry level tablet market. How does Intel compete with that pricing? For good measure, you could include MediaTek, a Taiwan smartphone processor provider, as an Intel threat from below.



Now Intel could simply avoid that commodity (more like throwaway) tablet market completely, but IHS noted that Chinese chipmakers are hoping to get design wins at Lenovo and HP. Once these companies gain a foothold at the bottom rung, they could move upstream in a hurry to higher margin processors.

IHS's point is worth noting, but this bottoms up attack may take time to play out. According to Mercury Research, Intel's overall market share was 87 percent Intel is now squeezing AMD at the low end of the PC, notebook and server markets.

intc market share mercury


In other words, Intel doesn't have to worry about the throwaway tablet market...just yet.