Could Intel be losing money with its SoC business?
2013 saw Intel make some of its most significant progress to date in getting its chips back into mobile electronics. Sure, 2012 had early entries like the Motorola Razr i, but by last year Intel was really stepping up the number of products incorporating its silicon. Even really high-profile names like Samsung were experimenting with Intel SoCs. But could Intel be trying just a bit too hard to reclaim some of its glory days, like when XScale chips were a staple of the PDA scene? A new report claims that Intel has been subsidizing sales of its Atom chips to such an extent that it’s not turning a profit on them.
The logic behind the analysis is a little dense to follow (hit up the source link for a detailed explanation) but the important takeaway is that by looking at Intel’s own statements about its financial forecast, the company appears to be either selling Atom SoCs (and specifically, Bay Trail chips that have been popping up in tablets) at cost, or could even be taking a loss on every sale.
Assuming this interpretation is accurate, what could be Intel’s motivation here? Is making the brand appear “hip” and current through an association with mobile hardware worth not bringing in a profit? Does Intel expect its costs to come down to the extent that it would no longer need to subsidize Atom sales? We can’t say, but it sounds like a desperate game the company’s playing.