Intel’s introduction of a new Atom processor platform designed to target the fast-growing market for low-end smartphones in emerging economies represents a shrewd strategy that could allow the company to expand its currently minimal market share in the industry. 
This is according to the IHS iSuppli/Screen Digest Mobile & Wireless Service at IHS, following the rollout of Intel’s new processor platform at this month’s CES in Las Vegas.
The platform, formerly known as Lexington, is aimed at developing regions of the world, where consumers are demanding low-cost smartphones that deliver high performance and a full feature set.
“By targeting the low end, Intel can attempt to address the market with the greatest opportunity for growth in the smartphone business during the next few years,” says Francis Sideco, senior principal analyst for wireless communications at IHS.
“With Intel now holding a negligible share of the global smartphone applications processor market, the company appears to be taking the steps it needs to in order to have a chance at expanding its presence in this segment.”
The low-end spectrum represents the fastest-expanding segment of the global smartphone market, with shipments more than doubling from 2012 to 2016. Low-end smartphone shipments will rise to 559-million in 2016, up from just 206-million in 2012.
Shipments of low-end smartphones will rise at a compound annual growth rate (CAGR) of 51% from 2011 to 2016. In contrast, high-end smart shipments will grow at a CAGR of only 12% during the same period.
Emerging regions where low-end smartphones have the most appeal are the expected to generate the fastest growth among all regions for mobile handsets in the coming years.
Shipments of all kinds of cell phones in China are expected to rise at a CAGR of 8% for the same five-year period, making it the world’s fastest growing region.
The next fastest-growing area will be the rest of the Asia-Pacific countries, which will rise at a 6% CAGR. Coming in third is the combined Eastern Europe, Africa and Middle East region, with 5% growth. In comparison, the well-established North American region will grow only 4%.
“In the emerging markets, optimising the cost/performance balance will be critical for success,” Sideco says. “Intel also will need to heavily leverage its acquisition of Infineon to ensure it offers the best solution involving both the applications processor and the modem – the two primary processing functions in a smartphone.”
Intel’s share of the market for applications processors used in smartphones is minimal at present. This market now is dominated by Qualcomm.
For the overall market for baseband chips governing all kinds of cell phones, Intel ranks third, behind Qualcomm and MediaTek of Taiwan. Intel held an 8,4% share of global revenue for cell phone basebands in the third quarter of 2012, the most recent period for which figures are available. However, Intel’s portion of the market represented only a sliver of the 52% share held by market leader Qualcomm.
“While Intel dominates the PC microprocessor market, in the smartphone semiconductor business the company has no place to go but up,” Sideco says. “And while Intel certainly faces major challenges in achieving the kind of leadership position in mobile handsets it now has in PC semiconductors, the company appears to be serious about building its competitive positioning in the smartphone chip market.”