Intel Corporation (NASDAQ:INTC)‘s new fourth generation Core processors (Haswell) included low power Systems on Chip (SOCs) that are being used in thin tablets without fans, a first for the Core series. These Haswell-based tablets have the potential to devastate the market for ARM Holdings plc (ADR) (NASDAQ:ARMH)’s tablet processors. Without a swift response from ARM’s Common Platform partners, International Business Machines Corp. (NYSE:IBM), Samsung, and GlobalFoundries, the ARM Holdings plc (ADR) (NASDAQ:ARMH) processor ecosystem could lie in ruins by this time next year.
Intel Corporation (NASDAQ:INTC) made a number of significant improvements that enabled it to fit a Core processor into the thin tablet form factor, but the main ones were improved power management and the development of single chip SOCs, eliminating the Platform Controller Hub, an accessory chip needed by the previous Core generation. These Core SOCs still consume roughly five times the power (5-10 Watts) compared to a typical ARM Holdings plc (ADR) (NASDAQ:ARMH) processor, but they are usually more than five times faster. Getting into the 5-10 Watt range allows these SOCs to be used in a tablet, and it can be thin since no fan is required.
These processors are full Intel Corporation (NASDAQ:INTC) 64 bit architecture machines capable of running Windows 8 Pro, or Chrome OS, or Android. At Computex, the industry trade show where the chips and devices were unveiled, Intel Corporation (NASDAQ:INTC) made it clear it was targeting all three OS markets.
The introduction of 64 bit Core computing into the tablet form factor is nothing short of revolutionary. The Microsoft Surface Pro hinted at what was to come, but it was bulky, heavy, and needed a fan for cooling its third Gen Core processor. Now, Microsoft will be able to update the Pro with a fourth Gen Haswell and get the size and weight down to something closer to the Surface RT.
But not quite to the Surface RT. Here, the main problem is the power requirement of the Haswell Y series processor. Five times the power means five times the battery capacity for equivalent battery life. Haswell tablets won’t be able to provide the battery life of ARM-based tablets, but this is the price to be paid for having a much more powerful computer.
For this reason, all of the Haswell tablets shown at Computex were what Intel Corporation (NASDAQ:INTC) calls 2-in-1 with detachable keyboards, and Intel Corporation (NASDAQ:INTC) really wanted to push the utility of the keyboard. In fact, the keyboard is mainly there to hold the extra battery pack that the Haswell tablet needs.
The necessity of carrying around the extra battery pack will tend to reduce somewhat the desirability of Haswell compared to current and future Atom or ARM-based tablets, and this goes far to explain Samsung’s decision to use the soon to be obsolete Clover Trail Atom in its new Galaxy Tab 3. Combined with the fact that the Bay Trail Atoms, based on the same 22nm process as Haswell, won’t be in tablets until Q4, the ARM Holdings plc (ADR) (NASDAQ:ARMH) ecosystem has a very limited window of opportunity to respond to the Intel tablet threat. The ARM-based ecosystems of Android and iOS can carry forward on some momentum due to their size, but this will not sustain them for long in the face of the Intel onslaught. Can ARM Holdings plc (ADR) (NASDAQ:ARMH)and its partners respond?
Yes, I think they can and they will. This may come as a surprise to Intel bulls, many of whom regard the largest ARM Holdings plc (ADR) (NASDAQ:ARMH) foundry, TSMC, with derision. I often hear it claimed that “TSMC will never get their 20 nm process off the ground,” despite the fact that TSMC has formally announced that it is ready to enter production. One of the constants of technological change is the rapidity with which technical advantage leaks away to competitors. Intel is able to produce x86 chips to compete with ARM chips because it uses a superior 22 nm process while the rest of the ARM world still uses 32 nm. This situation will probably not continue indefinitely.
