Intel Corporations Deal With Spreadtrum Just Got Weird

By Markets Fool.com

In EETimes, journalist Junko Yoshida had a chance to interview the CEO of Spreadtrum Communications, a mobile processor company in whichIntel took an equity stake last year. As you might recall, Intel and Spreadtrum said in the initial press release that, under the terms of the deal, they would work together to build Intel Architecture-based smartphone chips that both companies could sell.

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My understanding of the deal was that Intel would work with Spreadtrum to try to have future Spreadtrum mobile chips utilize Intel CPU cores in a bid to try to expand the footprint of Intel's x86 architecture in mobile. It seems, though, from the EETimes piece that the terms of the deal have now changed, making this smell more like a traditional foundry deal.

"Under no obligation"
According to the article, Spreadtrum is aiming to use Intel's 14-nanometer manufacturing technology to build both low-end and high-end applications processors for the mobile market next year. This makes perfect sense given that Intel had signaled that its own 14-nanometer smartphone applications processors would launch next year.

Where things get weird, though, is that Spreadtrum CEO Leo Li is quoted as saying that the company has "no obligation" to use Intel's intellectual property unless that technology proves to be "competitive on the market." If I'm reading this correctly, if Intel's IP isn't as good as, say, ARM's , then Spreadtrum could very well use Intel's own manufacturing technology to build better chips than what Intel will build and sell on its own.

Spreadtrum is going to build high-end chips on Intel's technology, too?
If the above wasn't weird enough, it gets even crazier. Spreadtrum's CEO indicated in the interview with EETimes that it would be building both low-end and high-end mobile applications processors on Intel's 14-nanometer technology.

Why is this such a big deal? Well, if you rewind back to Intel's 2014 Investor Meeting, Intel management indicated that these partnerships would be focused on the low-end of the mobile market, and that it would continue to invest organically in chips aimed at the high-end of the mobile market.

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I don't know about you, but it would seem to me that what's going on with Intel and Spectrum now is pretty different from what Intel had indicated was going on late last year.

Time for an update on Intel's mobile chip strategy
As somebody who follows Intel's mobile processor strategy quite closely, I must admit that Intel's strategy is confusing, at best, and downright indecipherable, at worst. On one hand, Intel says that it's trying to organically build competitive products for the mid-range and high-end while working with external partners to successfully compete in the low-end.

On the other hand, it now seems that Intel is perfectly willing to act as a foundry to its "partners" for low-end chips to help them build higher-end processors potentially based on the ARM architecture.

Throwing Intel Architecture under the bus
Additionally, if you pay close attention to the EETimes interview, Spreadtrum's CEO seems to throw Intel Architecture -- I assume he is referring to Intel's CPU designs -- under the bus. In particular, he says that Intel could "fine tune" Intel Architecture for mobile power envelopes, but notes that this is something that might only be viable "three years from now."

Is Spreadtrum's CEO saying that, as far as he knows, Intel's current Atom processors, as well as the ones coming over the next few years, are inefficient compared to ARM offerings? If this is the case, Spreadtrum could potentially utilize Intel's manufacturing technology to build ARM-based chips that would offer better performance per watt than Intel's own chips on that very same manufacturing technology.

There are lots of questions that Intel needs to answer with respect to its mobile efforts, and I'm sure that Intel stockholders would appreciate getting some answers. I hope that, at this year's investor meeting, Intel talks more about its chip strategy with respect to mobile, something that I felt was sorely missing last year.

The article Intel Corporations Deal With Spreadtrum Just Got Weird originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. 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.