Intel's Turnaround Faces New Challenges from Arm-Based PC Chips

Intel's Turnaround Faces New Challenges from Arm-Based PC Chips

Intel is in the midst of an ambitious turnaround plan, aiming to regain its technological edge, develop AI-related platforms, and establish a substantial foundry for third-party chip manufacturing. However, this turnaround venture comes with significant financial demands. Intel's cash flow heavily depends on its core PC CPU business, where it has traditionally held a dominant position.

Despite a recent PC downturn, Intel now faces three substantial challenges that threaten its PC business, and, consequently, the success of its entire turnaround strategy.

Nvidia and AMD are reportedly working on PC processors based on Arm Holdings architecture, designed to run on the Microsoft Windows operating system. These chips are expected to be available for PCs in 2025. Microsoft had previously collaborated with Qualcomm to create Arm-based chips for Windows. However, Qualcomm's exclusivity agreement is set to expire in 2024, and the company has unveiled a new Arm chip for PCs, delivering impressive performance.

In response to Apple's success with Arm-based M-series chips, Microsoft aims to diversify the PC market. Nvidia and AMD, known for their chip innovation, are poised to disrupt the industry, particularly as manufacturers seek to integrate AI capabilities into PCs.

Qualcomm is also preparing to challenge Intel, AMD, and Nvidia with its Snapdragon X Elite processor for Windows laptops, set to launch in 2024. This chip outperforms Intel's i9 for gaming and Apple's M2. It excels in handling AI tasks, capable of processing large language models with up to 13 billion parameters.

Historically, the entrenched x86 architecture and software compatibility issues have hindered the widespread adoption of Arm chips in PCs. Developers mainly focused on x86 software. Even past attempts at Arm-based tablets faced compatibility challenges. Apple addressed this by developing Rosetta 2, an application compatibility layer for its Arm-based M2 chip.

For Microsoft, achieving software compatibility on Qualcomm chips, as well as potential offerings from AMD and Nvidia, presents a complex challenge. If Arm-based chips gain traction, Intel's position could be threatened. The company's financial stability relies on its well-established PC chip business. If its x86 PC chip dominance is challenged, Intel's financial strength may be further strained.

Intel CEO Pat Gelsinger's turnaround mission has become more formidable with these new challenges.