Report: Intel Corporation Planning Key Tech Integration Into Upcoming Processors

By Markets Fool.com

Per a new report from DigiTimes, which cites "sources from motherboard makers," microprocessor giant Intel (NASDAQ: INTC) is "planning to add USB 3.1 and Wi-Fi into its motherboard chipsets."

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Dr. Venkata (Murthy) Renduchintala,president of Intel's client and Internet of Things businesses as well as its systems architecture group. Image source: Intel.

That integration, the report says, could arrive with Intel's "upcoming 300-series [chipsets] scheduled to be released at the end of 2017."

Although this might not seem like much, it's a big deal. Here's why.

Intel could gain significant Wi-Fi share, boost revenue content

Back at Intel's 2015 investor meeting, former Intel client computing group (CCG) chief Kirk Skaugen told analysts that the company's long-term goal was to pursue a strategy of "intelligent integration" of key functionality into its platforms (processors and chipsets).

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USB 3.1 integration doesn't come as much of a surprise; current sixth- and seventh-generation Core processor chipsets integrate support for USB 3.0, and adoption of the newer, zippier USB 3.1 technology is the natural next step for the chipmaker.

The more interesting thing here is that Intel might get Wi-Fi integrated into next-generation chipsets.

Intel has long been a major vendor of stand-alone Wi-Fi modules, with around 40% share of Wi-Fi chips sold into personal computers.

By building Wi-Fi capability directly into its chipsets, Intel positions itself to do two things:

  1. Grow its share of Wi-Fi in the overall personal computer market (both desktop and notebook).
  2. Increase adoption of Wi-Fi in the desktop personal computer market, potentially boosting more dollar content in desktop personal computers.

Let's take a closer look at each of these.

It's hard to beat integration

The key reason for a chip company to integrate the functionality that was once handled by two stand-alone chips into one is simple: cost reduction.

When a stand-alone chip is manufactured, a silicon die needs to be created, and that silicon die needs to be tested and packaged. The latter two steps aren't trivial and add cost.

In a solution that requires two chips, those packaging and test costs are incurred twice. By bringing the functionalities of the two chips together (in this case, a chipset and a Wi-Fi controller), the size of the chip being manufactured increases, but the costs that are duplicated when two chips are manufactured are only incurred once.

This means that Intel could be able to offer integrated Wi-Fi for cheaper than what a competitor would be able to deliver with a stand-alone solution. With a cheaper, more integrated solution at hand, it might become very tough for Intel's competitors in Wi-Fi chipsets to compete.

Beyond the share gains, though, the integration of Wi-Fi directly into Intel's chipsets (which are required for an Intel processor to function) could drive adoption of Wi-Fi significantly up in desktop computers. Some desktop motherboards today include stand-alone Wi-Fi chips as premium options, but certainly not the majority.

With key Wi-Fi technology built into every Intel desktop chipset, more desktop motherboard makers may be more interested in adding the remaining components to their motherboard designs to enable Wi-Fi functionality.

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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.