Industry insight from Dr. Robert Castellano, The Information Network
NEW TRIPOLI, USA: Back on January 7, 2009, the Information Network issued a release discussing Intel’s Atom processor, questioning whether Intel’s slashed revenues of about a billion dollars for Q4 2008 were do to the company misjudging the success of the netbook and its Atom processor.
According to our argument, Intel manufactured $29 Atom processors slated for a burgeoning netbook market, instead of profitable Penryns priced at $279 and used in notebooks.
The thesis presented by The Information Network was that at a price difference of $250 per processor between the Penryn and Atom, Intel lost $1.14 billion in revenue in 2008 by making the cheaper Atom processors because of contractual obligations with netbook manufacturers.
According to the analysis, a total of 2,436 Atoms can be made on one 300mm wafer for a total selling price of $70.6K per wafer (neglecting edge loses and yields for this quick calculation).
In contrast, a total of 660 Penryns used in notebooks and priced at about $279, can be made on one 300m wafer for a total selling price of $184.1K per wafer.
This week, Intel announced that the new N450 Atom is 60 percent smaller and 20 percent more efficient than its predecessor. That translates to 4,060 Atoms made on one 300mm silicon wafer. At a selling price of $64 per Atom, the total selling price per wafer of $259.8K – more than the Penryn chip for the notebook market.
According to a report by The Information Network entitled Intel vs. ARM in Mobile Devices and Netbooks/Smartbooks, 31.1 million netbooks are forecast to be made in 2010.
The report also notes that Intel will exhibit an 80 percent share of the netbook market, competing against ARM. Neglecting volume discounts to netbook manufacturers, Intel stands to make $1.6 billion on the Atom for just netbooks.
Since the price differential of a 300mm wafer with the new N450 Atom ($259.8K) vs. the old N270 ($70.6K) is $189.2K and a total of 6,130 wafers of good Atoms will be processed (neglecting yield loss), Intel stands to generate $1.2 billion more on sales of the N450 for netbooks in 2010 than it would have with the N270.
Add to Intel’s revenues the low-power chipset that works together with the Atom CPU. Nvidia has reportedly landed orders for Ion 2-based chips designed to support the N450, so the company also stands to generate substantial revenues.
According to Intel, the company has over 80 design wins to-date for the new Atom platform from original equipment manufacturers (OEMs) like ASUS, Acer, Lenovo, Dell, MSI Computer, Toshiba, Samsung and Fujitsu. The N450 adds muscle to ARM’s challenge in its Smartbook space.
At CES, I anticipate quite a lot of announcements coming out of the ARM camp to counter Intel. Nvidia, for one, will make a major announcement about its Tegra family, which marries an ARM-based processor with its GeForce GPU.