Apple’s Positioning Should Scare Intel and Others


Will the combination of the ARM processor coupled with 14 nm FinFET process thanks to Samsung change the dynamics of the mobile processor market? That is certainly the logic being put forward by Mark Hibben at Seeking Alpha.

As he explains:

The term FinFET stands for Fin Field Effect Transistor because one of its structural features is a vertical silicon fin. FinFETs have a power efficiency advantage over previous generation transistors that goes beyond process node size. Processors built with FinFETs run faster while allowing for increased battery life.

His point is that Samsung is on the record saying they will soon be producing Apple A9 chips using this fabrication process. This coupled ARM’s architectural-efficiency advantages and Apple’s chip-design know-how gives Cupertino a significant edge in the market.

Moreover, he argues Intel is losing about $1 billion per quarter subsidizing their mobile device business, hoping to eventually be profitable. While most ARM chips are fabricated on a 28 nm process which is one generation behind Intel.

Subsequently, when ARM chips are produced utilizing a 14 nm FinFET process, Intel will not have the advantage it has today – one which is helping it gain success in mobile but at a tremendous cost.

Hibben further argues ARM chips will eventually find their way into Macs – starting with the MacBook Air.

Without getting too deep into the weeds of disruptive technologies, ARM seems destined to own the desktop and eventually the server markets. It seems it’s always the low-cost provider that moves upmarket and takes share from the market leader. We are used to seeing this happen. A simple example is how Toyota, once considered a poor manufacturer of cars competes head-to-head with Mercedes with its Lexus division and Hyundai is taking on the luxury segment today while a decade ago no one would consider saying the word premium and Hyundai in the same sentence.

Another simple fact is Samsung has to bet on other markets as the smartphone wars have become more challenging thanks to Xiaomi and others commoditizing the Android market.

In other words, the high margins in the smartphone space for companies other than Apple are likely coming to an end. Want proof? Well the iPhone 6 Plus can be approximated by an Android tablet from Amazon which sells for $115! Starting price for the iPhone 6 Plus? $749!

Apple has cash, tons of it to throw at designing the best processors and Samsung has no choice but to continue processor investment in order to keep the profits coming in as the Android smartphone market becomes even more commoditized.

As this happens, expect ARM chips to become more competitive than ever and eventually permeate servers, desktops and anything in-between.

It seems inevitable.

Looking for a counterpoint? Well, as I have written in the past, the Intel Atom Z3745 processor is an impressive product which shows Intel can produce low-power processors that are still powerful in environments which aren’t choc-full of RAM.

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