It’s hard living in a post-PC world, especially if you’re chip giant Intel. A Wall Street analyst downgraded the company from “Buy” to “Neutral” after key PC makers signaled plans to adopt rival ARM – not to mention the smartphones and tablets also throwing sand in Intel’s face.
Sterne Agee analyst Vijay Rekesh said Intel faces several storms during 2012-2013. He expects major PC manufacturers will have a 10-15 percent of products using ARM’s processors. As a result, Intel will lose 1 million “high-margin PC units to ARM,” requiring more than 4 million smartphones to offset the loss. Also, more emerging markets will move to the low-cost ARM products, he tells investors.
This isn’t too surprising. Yesterday we reported that Google is jumping from the Intel x86 bandwagon to an ARM-based SoC made by Marvell to produce the next Google TV device. Little wonder Sterne Agee marked down Intel’s target price to $25.40, a drop from $26.
The reason for PC makers are drawn to ARM is obvious. “Low-cost PCs on ARM that can now run Microsoft Office” along with a favorable licensing structure, makes the rival chipmaker a good choice for computer manufacturers, says Rekesh.
The analyst doesn’t see Intel best suited for a post-PC market. Qualcomm “is best positioned to capitalize on smartphone growth,” he told writes in a Friday note.
Then there are the tablets. As Intel loses more PC customers, it must make up the difference by selling its Medfield chip for smartphones, an unlikely prospect. Because Intel can sell a PC chip for around $100 a pop, but Medfield for about $25, it means the chipmaker will have to sell boatloads of smartphone processors to balance the lost PCs, the analyst notes.
It looks to be a long cold winter for Intel and the forecast doesn’t appear to be much more sunny for the near future..