It’s no secret that Intel Corporation (NASDAQ:INTC) has missed out on the explosive growth in mobile computing. It’s also no secret that declining PC sales are weighing heavily on the company’s future prospects. However, Intel Corporation (NASDAQ:INTC)’s just-announced Quark microprocessors are its first serious foray into the tiny system on a chip, or SoCs, that are being found in progressively more and more of the things we use.
Can Intel Corporation (NASDAQ:INTC) become “all microprocessors for all things,” or is this a step into a price-driven, commodity business that will take focus away from more profitable segments like mobile? Let’s take a look.
Internet of things
The world around us is becoming more connected every day, almost to a pervasive extent as microprocessors and WiFi integrate more than just consumer electronics into our online lives. Everything from the Nest thermostat to to WiFi enabled refrigerators contain SoCs, enabling us to access them remotely, or use them in ways that we never imagined before. Industrial use of these small, integrated chips is growing like crazy, too.
To heck with wearable computing — what about swallowable computing?
The ability to shrink microprocessors to a size that can be embedded in an ingestible medicine isn’t that far removed from science fiction. Startup Proteus Digital Health has already developed sensors that can transmit a signal when they interact with bodily fluids in digestion, so in a few years, we could see more powerful ingestible systems that are able to measure, record, and report data about our bodies.
Freescale Semiconductor Ltd (NYSE:FSL) is already making chips that are small enough, with its Kinetis Micro-CPUs, or MCUs. At 2 millimeters by 2 millimeters at their smallest so far, the barrier between what’s theoretically possible and what’s real isn’t as wide as you may think. The question is multi-faceted, though, as to what the real benefits could be, and how large the potential market for this sort of technology will become. Add in concerns about patient privacy and swallowing a tiny computer that’s transmitting data about your health may not be appealing, no matter the potential benefits. Freescale Semiconductor Ltd (NYSE:FSL), quite frankly, should be concerned that Intel Corporation (NASDAQ:INTC) is moving into these smaller SoCs. The company’s business is based on purpose-built microprocessors in a variety of industries, including automotive and health care devices, and seeing Intel Corporation (NASDAQ:INTC) potentially step into parts of this segment is a serious threat.
QUALCOMM, Inc. (NASDAQ:QCOM) is also involved in the medical field with its QUALCOMM, Inc. (NASDAQ:QCOM) Life subsidiary, and the 2net Platform that’s targeted at connectivity for medical devices, specifically providing secure interoperability. However, QUALCOMM, Inc. (NASDAQ:QCOM)’s ARM-based Snapdragon processors make up a significant share of the still growing mobile market. The most recent quarter’s revenue and operating income growth of 35% and 31% were largely driven by the 22% growth in “MSM” shipments, which is QUALCOMM, Inc. (NASDAQ:QCOM)’s name for its mobile SoCs, specifically the Snapdragon series of mobile processors. Lastly, the company’s projections for the rest of the year make it clear that mobile is still the focus. QUALCOMM, Inc. (NASDAQ:QCOM)’s 21%-35% revenue growth corresponds to its projected growth in MSM shipments of 21%-28%.
