Intel has a lot to worry about these days. The ongoing fallout from Meltdown and Spectre vulnerabilities identified in its CPUs. The forced resignation of its CEO. A resurgent Advanced Micro Devices, Inc. (NASDAQ:AMD) with its Ryzen CPUs.
But the biggest threat may turn out to be Qualcomm.
Details are leaking about that company’s forthcoming Snapdragon 1000 chip, designed to run Windows 10 on ARM-based laptops. And based on what’s being said, the high-performance QCOM chip looks capable of becoming a serious headache for Intel.
With laptop sales defying the general long-term slide of PCs, the Snapdragon 1000 has real upside for QCOM stock, which has had a tumultuous year thanks to legal battles with Apple (NASDAQ:AAPL) and various regulatory bodies.
Windows 10 on ARM
Microsoft (NASDAQ:MSFT) has been working hard on a version of Windows 10 designed to run on ARM-based CPUs instead of the x86 processors made by Intel and AMD. The first attempt at this was the disastrous Windows RT, but MSFT learned from that experience. The first Windows 10 on ARM devices are already on the market, and the company hopes to see the category explode in popularity.
That would be good news for QCOM (and Qualcomm stock), since its Snapdragon chips are the ones powering these devices.
Why the fascination with Windows on ARM?
Microsoft calls this new class of laptops “always connected.” Essentially, the company is trying to stave off the threat of tablets and smartphones from taking over from the PC (and Windows), by offering a laptop design with the best elements of these mobile devices: they turn on immediately instead of booting up, they have built-in LTE so they’re always connected, they run silently, and they offer extended battery life. With expected prices in the $600 to $800 range, Windows on ARM laptops will also fill a slot between Chromebooks and traditional Intel-powered laptops.
To fully live up to user expectations of a Windows 10 laptop, the device has be powerful. It needs that power to run Windows 10 and its applications at an acceptable speed, despite the x86 emulation involved.
The Snapdragon 835 chip that powers the current generation of Windows 10 on ARM laptops is a repurposed mobile chip, so its performance is hindered by compromises. The Snapdragon 850 due later this year is the first version QCOM designed specifically for laptops. But it’s the Snapdragon 1000, due to arrive in 2019, that could really change the game.
Details of QCOM’s upcoming flagship laptop chip have leaked and Intel should be worried.
According to ARS Technica, the Snapdragon 1000 is expected to offer performance on par with Intel’s 2017 U-series Skylake CPUs. While not suited to PC gaming — Windows 10 on ARM laptops are aimed at productivity — that’s high performance in a chip that’s roughly half the physical size of Intel’s, and expected to offer far longer battery life. Plus the other advantages of the platform including LTE connectivity, instant-on capability, ultra-thin design and a low price point.
A Buffer Against Smartphone Decline
It’s ironic given the current situation, but earlier in the decade, Intel was on a mission to try to force its way into the mobile CPU business as PC sales began to stumble. It decided to take on Qualcomm with the Atom series of chips for smartphones. Despite investing over $10 billion in the venture, the company never really gained any traction and called it a day in 2016. Now, with the smartphone industry entering a mature phase, Qualcomm is following the same diversification strategy with chips like the Snapdragon 1000 –trying to break into Intel’s core PC market in an effort to boost revenue.
Whether Qualcomm also ends up like Intel in ultimately giving up, or succeeds and taps into a new market of Snapdragon-powered Windows PCs, is likely to have a significant impact on QCOM stock over the next few years. It’s also going to affect INTC’s performance.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
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