1 Potential Problem for Intel Corporation's Broxton Chip

Investors who have followed Intel's mobile developments know that back in late 2013, the company promised it would launch a mobile platform known as Broxton in the mid-2015 timeframe. The company's executives, from the former head of the mobile group to the company's CFO, gushed about the performance of this upcoming chip, saying it would be a "leadership" part.

While it remains to be seen whether Broxton will be able to deliver on the big promises Intel's executive team made, there is one problem -- Qualcomm's Snapdragon 820.

Qualcomm's big advantageBroxton is expected to be built on Intel's 14-nanometer FinFET manufacturing technology. Qualcomm's 820 is expected to be built on a "leading FinFET" process (so it's either Samsung's 14nm LPP or Taiwan Semiconductor's 16 FinFET Plus). If Intel's claims are to be believed (and I believe them), its 14-nanometer technology is "ahead" of those foundry technologies in density and potentially performance, giving it an edge.

The problem, though, is that even if that's true, the Snapdragon 820 is a fully integrated cellular baseband and applications processor deal, while Broxton is a stand-alone applications processor. This means a phone using the Broxton solution gets a nice 14-nanometer applications processor, but a stand-alone modem built in a relatively old 28-nanometer technology.

With the Qualcomm technology, it's 14/16-nanometer all around. And, given that the cellular modem is a relatively big part of the overall power consumption profile of a smartphone, this could lead to an overall efficiency advantage for the Qualcomm part.

Does Broxton stand a chance in phones, then?If Intel stands to have any chance of success with Broxton in high-end smartphones, it will need to offer performance that's unequivocally ahead of what Qualcomm brings to the table with the 820. Intel doesn't exactly have a track record of building best-in-class smartphone solutions, and although the company did tout Broxton as "leadership," I think some caution is warranted, here.

Not all is lost if Broxton doesn't succeed in phonesAlthough it would be hugely disappointing if Broxton were to be a commercial dud in the smartphone market, not all would be lost in that case. Most tablets are Wi-Fi only, so the lack of integrated modem in Broxton wouldn't be a deal-killer for such devices. If Intel can use Broxton to raise its average selling prices in tablets (meaning more revenue and ultimately gross profit dollars), that would still be a win.

Additionally, as I've written about previously, Intel plans to bring Broxton to the low end of the PC market. If Broxton does offer best-in-class tablet/phone class performance, then it should certainly offer best-in-class performance into the low end of the PC market. At the very least, this would allow low-end PCs to not fall behind flagship smartphones and tablets in terms of performance (again, if Intel's claims are true).

Future high-end mobile chips need integrated modemsOver the long term, if Intel plans to be a major contender in the high end of the smartphone chip market, it needs to offer integrated applications processor and modem products at the high end. Qualcomm is doing it, and since Qualcomm is the one to beat in this market, Intel will have to follow suit. Can Intel actually pull it off? Only time will tell.

The article 1 Potential Problem for Intel Corporation's Broxton Chip originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.