Intel talks ‘SoFIA’ At Mobile World; Could Boost Tablet Biz, Says Wells
By Tiernan Ray
Shares of Intel (INTC) today rose 81 cents, or 2.4%, to close at $34.06, amidst a mixed bag of commentary from the sell side.
Nomura Equity Research‘s Romit Shah, who was at Intel’s presentation at the Mobile World Congress today, has a Neutral rating on Intel’s shares, but nevertheless offers up some of the optimistic news from CEO Brian Krzanich — specifically, the formal unveiling of plans for Intels’ “SoFIA” modem and apps chip for tablet computers:
At MWC, Intel announced the launch of its 5-mode Sofia LTE solution for tablets, phablets, and smartphones. Intel indicated that 20 companies including ASUS, Jolla have selected the Sofia platform. In addition, Intel also announced its 14nm x5 and x7 Atom SoCs (formerly code-named Cherry Trail) for tablets and 2-in-1s. Intel also announced its Cat 10 LTE thin modem supporting LTE connectivity from smartphones to PCs. ? Intel also sees good progress in reducing mobile losses by $800m this year. Key drivers being smaller BOM differential in Sofia LTE and lowered investments in mobile due to partnerships with Rockchip and Spreadtrum. Intel indicated that it expects to use its own process technology to build the next gen Sofia LTE, which we expect to be launched in 1H16.
Intel has said that SoFIA is among parts that will help it stem huge losses in tablets.
One fellow who believes that is David Wong of Wells Fargo, who has an Outperform rating on Intel shares, noting today that data out Friday from research firm Strategy Analytics suggest Intel is gaining ground in chips for tablets.
Apple’s (AAPL) iPad, which uses Apple’s own chips, slipped to 26% of the tablet market in 2014, noted strategy analytics, down from 32.6%, and Samsung Electronics (005930KS), which uses some of its own chips in its tablets and some from Intel and others, slipped to 17% from 18.3%, the firm reports.
They both lost ground to “white box” tablets running other chips, perhaps many of them running Intel parts. White box tablets rose to 29% of the market from 24% a year earlier, ” via entry-level and ultra-low priced Tablets in emerging markets and as holiday promotions in developed markets,” said Strategy Analytics.
With Intel’s progress already, Wong thinks new parts such as SoFIA will help Intel gain more share while reducing its losses:
Our guess is that Intel will take action to limit tablet processor growth in low end tablets during the first half of 2015 as its Bay Trail and Cherry Trail tablet processor products still require subsidies when used in low end tablets. o However, we expect that in the coming week, Intel will launch its first SoFIA products. SoFIA is a family of tablet and smartphone processors (with integrated modems) that will not require any subsidies when used in low end tablets. o We think that the first SoFIA chips might ramp into volume in tablet products in 2H15. o In the next few months we also expect Intel and Rockchip will launch SoFIA-based chips jointly designed by the two companies, targeted at the Chinese tablet market. o We think that Intel’s will maintain its tablet processor market share in the 16-20% range in the first half of 2015 and then begin to show renewed share momentum in the second half of 2015 and through 2016. o We believe that by the end of 2016 Intel’s tablet processor revenues could have grown to several hundred million dollars per quarter, from being negative in the December 2014 quarter. We discuss Intel’s tablet and smartphone chip dynamics and products in more detail in an Intel note dated Feb 11, 2015.
AI
