Intel to phase out subsidies that flooded the market with cheap Android tablets

Intel to phase out subsidies that flooded the market with cheap Android tablets
Ever since Apple decided to go with its self-designed A4 processor for the OG Apple iPad instead of Intel's Silverthorne chip (later known as Atom), the silicon slinger has been working hard to get its chips inside of Android tablets. Using subsidies to persuade tablet manufacturers, it has been able to have its Intel Atom chips placed inside cheap Android slates, in place of the ARM based processors that might have been used instead.

Besides offering cheap prices for the Atom chips, Intel also agreed to a co-marketing budget in some cases. Intel also offered to reimburse tablet manufacturers for the price of redesigning the motherboard to accommodate Intel's chips. According to Bernstein Research analyst Stacy Rasgon, the subsidies amount to about $51 per tablet, which is quite a gift considering that these slabs sell for $199 or less. Rasgon says that for 2014, Intel will be selling chips to these tablet manufacturers at a tad above costs, with its margins close to zero.

Morgan Stanley analyst Joseph Moore says that Intel lost $3 billion in its mobile chips division in 2013, and is expected to show another $4 billion in losses this year. According to the analyst, Intel has had enough after the $7 billion in losses, and will start to phase out the subsidies in 2015.


For consumers, eliminating the subsidies will mean higher priced low-end Android tablets over the next few years. For Intel, it will be an attempt to turn around a mobile chip division that has been drowning in red ink.

source: AppleInsider

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21 Comments

1. Furbal unregistered

This will hurt windows tablets as well. Boo

3. sgodsell

Posts: 6739; Member since: Mar 16, 2013

Intel is dumb. Think about it for a moment. Most of the Android tablets and phones have been non-intel. Wait for it, the vast majority have been ARM. Please Intel tell us when this flooding occurred again? I have yet to see it. Its because of your extra charges and the power consumption on your processors that ARM took off in the first place and is now the dominant CPUs.

7. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

I only see Asus and a few Lenovo model using Intel Atom for Android. Personally, I prefer ARM over Atom as initially there some app compatibility issue. Wonder its been 100% resolved?

14. Augustine

Posts: 1043; Member since: Sep 28, 2013

Not coincidentally, both are also PC makers whom Intel has badgered with less than ethical leverages for many years.

9. guest

Posts: 368; Member since: Jun 13, 2012

Power issues don't exist with Intel mobile chips. The extra charges are going away next year as things become more integrated. I believe they already sold 30 million mobile chips this year.

10. -box-

Posts: 3991; Member since: Jan 04, 2012

What makes you say that? The article seems to indicate it affects the Android-running Atoms.

18. Furbal unregistered

They were subsidizing most of their low end chips. One reason why chromebooks switched from the haswell 2995u (or whatever it was) chips to the new baytrail ones.

2. Augustine

Posts: 1043; Member since: Sep 28, 2013

Interesting to see Intel using the same tactics that it's used with PC makers to stifle competitors are now being used to give it a chance to compete, but instead resulting in huge losses this time around. Karma is a bitch.

8. guest

Posts: 368; Member since: Jun 13, 2012

It's unfortunate you know so little about what you are talking about. But if it makes you feel better cool. They will do to QCOM what they did to AMD. They are the only ones with enough financial and engineering muscle to do so. Even Apple will eventually switch.

15. Augustine

Posts: 1043; Member since: Sep 28, 2013

Thank you for enlightening me, o great guest! Wait, AMD never had more than a couple of billion in the bank, QCOM has fifty billion. APPL, worth more than INTL, makes its own chips. Never mind, you're clueless. PS: I've worked at AMD for almost a decade.

19. mystry2me

Posts: 1; Member since: Nov 16, 2014

Augustine:I worked for Intel for nearly 10 years and agree with everything you've said. They have more problems than their mobile chips; for too many years they invested in useless layers of 'dead-wood' middle managers while investing billions into constructing fabs that didn't always pan out. Intel is its own worst enemy.

4. darkoman4

Posts: 181; Member since: May 30, 2014

This makes no sense. There is no way Intel sold (gave away) so many chips for android tablet market. There is barely any android tablet using these chips. Let's also include windows 8.1 tablet and this again don't add up. Seams to me, Intel is using could have, should have, would have tactics to explain money flow.

6. j2001m

Posts: 3060; Member since: Apr 28, 2014

The new tesco tablet uses it in the uk that a big one it sells for £130 and as good spec. This is the linkhttp://www.tesco.com/direct/hudl2-8-wi-fi-tablet/454-7907.prd?skuId=397-7926&icid=techgaming_trade_slot2

12. hemedans

Posts: 746; Member since: Jun 01, 2013

probably it is fake news, 4bn is huge even ms dont lose that kind of money in rt

16. uzimafioso

Posts: 467; Member since: Jul 15, 2014

They aren't actually losing anything. They're just telling you how much it affects their profits...

17. darkoman4

Posts: 181; Member since: May 30, 2014

Exactly. In other words they are saying we lost 7 billions because if all those tablets out there used our chips and payed full price on them, we could have made 7 billion dollars.

20. livyatan

Posts: 867; Member since: Jun 19, 2013

It makes all sense since Intel reached second place in tablet SoC market share during the last quarter (after Apple and ahead of Qualcomm). They subsidized 40 MILLION of BayTrail chips. Glad that's over, now let's see if they can compete fair and square. Judging by past results and the huge embarrassment the Core M is turning out to be, I really doubt they can compete. Snapdragon 810 is already being licensed left and right, and Tegra M1 will be an absolute monster.

5. silencer271

Posts: 254; Member since: Apr 05, 2013

They best make them worth it then because the ATOM chips are decent but not qualcom or a tegra.

11. guest

Posts: 368; Member since: Jun 13, 2012

That Intel analyst is a permanent intel basher. I wouldn't take anything he says seriously. He had a price target on intel at $18 I think it was and the stock is at $34. The reason the subsidies are going away is because more components are being integrated so it will be built into the price starting next year. That's the current advantage that Qualcomm enjoys which will slowly go away as Intel integrates the various components of a SoC. It's only a matter of time before Intel AMD's Qualcomm.

13. hemedans

Posts: 746; Member since: Jun 01, 2013

cant wait for cherrytrail, baytrail alone destroy all mobile soc

21. livyatan

Posts: 867; Member since: Jun 19, 2013

Hahahah, good one

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