The past two weeks have been a busy – if not tumultuous – period for Intel. Driven by continued challenges in various semiconductor markets, culminating in weaker-than-desired earnings in the most recent quarter, Intel has set out to change their direction and refocus the company towards what they see as more lucrative, higher growth opportunity markets such as data center/server markets and cellular (5G) connectivity. To get there, the company is making changes to both their product lines and their head count, with the goal in the case of the latter to cut 11% of their workforce by the middle of next year.

Today’s big news out of Intel is along these lines, and with strategy and workforce news behind them, we have our first announcements on product changes that will come from Intel’s new strategy. In a report on Intel’s new strategy published by analyst Patrick Moorhead, Moorhead revealed that Intel would be radically changing their smartphone SoC plans, canceling their forthcoming Broxton and SoFIA products and in practice leaving the smartphone market for at least the time being.

Given the significance of this news we immediately reached out to Intel to get direct confirmation of the cancelation, and we can now confirm that Intel is indeed canceling both Broxton (smartphone and tablet) and SoFIA as part of their new strategy. This is arguably the biggest change in Intel’s mobile strategy since they first formed it last decade, representing a significant scaling back in their mobile SoC efforts. Intel’s struggles are well-published here, so this isn’t entirely unsurprising, but at the same time this comes relatively shortly before Broxton was set to launch. Otherwise as it relates to Atom itself, Intel's efforts with smaller die size and lower power cores have not ended, but there's clearly going to be a need to reevaluate where Atom fits into Intel's plans in the long run if it's not going to be in phones.

For the moment Intel’s announcement leaves some ambiguity in their larger mobile plans – where does the remaining Apollo Lake fit into the picture for tablets, if at all? – but for now we have a very clear picture of the smartphone SoC market, and how Intel will no longer be a part of it.

Intel’s full statement:

Intel is accelerating its transformation from a PC company to one that powers the cloud and billions of smart, connected computing devices. We will intensify our investments to fuel the virtuous cycle of growth in the data center, IoT, memory and FPGA businesses, and to drive more profitable mobile and PC businesses. Intel delivers a broad range of computing and connectivity technologies that are foundational to this strategy and that position us well to lead the end-to-end transition to 5G. Our connectivity strategy includes increased investment in wired and wireless communications technology for connecting all things, devices and people to the cloud, and to power the communications infrastructure behind it. We re-evaluated projects to better align to this strategy.

I can confirm that the changes included canceling the Broxton platform as well as SoFIA 3GX, SoFIA LTE and SoFIA LTE2 commercial platforms to enable us to move resources to products that deliver higher returns and advance our strategy. These changes are effective immediately.

Update 4/30: After publication, Intel sent along a second message clarifying that Broxton is canceled for both "phones and tablets," as the latter was not mentioned in their original message.

Smartphone SoCs: The Path so Far

Anyone following Intel’s exploits in the smartphone space over the last few years has been watching them with interest on product, timeliness and execution.

We’ve interviewed and appeared on video speaking with Aicha Evans, Intel’s current corporate Vice President of the Communication and Devices Group, whose large enthusiasm, energy and mantra of time to market has steered Intel over the past few years into the mobile scene, after bashfully missing an early entry. In that time, Intel has invested many billion dollars in both SoC and modem development to claw a market from the slew of ARM-based solutions in the wild. Aside from having a process node advantage during that time, Intel has had to redevelop its microarchitecture products and radio business into something that could be efficient, performant and price competitive, all the while maintaining the high margins Intel's overall business requires. Particularly in the radio business, the bread and butter of the CVP, Intel acquired and merged several companies to expand its radio portfolio, including the CDMA assets of VIA Telecom announced as recently as Q4 2015, as well as Infineon Wireless (modem/RF) and Silicon Hive (ISP).

As admitted by Intel, the first few generations were rough, either resting on their laurels or not having a complete solution. Earlier this decade Intel used a ‘contra-revenue’ strategy, investing into OEMs that would buy their chips, causing operating losses for the mobile division of $3.1 billion in 2013 and $4.2 billion in 2014 with a much lower revenue stream. Intel subsequently combined the financial reports of their mobile and consumer PC businesses into a new Client Computing Division, bringing all CPU/SoC development under a single roof but also obfuscating the investments and losses behind a high performing, high margin part of the company.


(Image Courtesy Tweakers.net)

Thus Intel’s big wins in the smartphone space have been rather limited: they haven't had a win in any particularly premium devices, and long term partners have been deploying mid-range platforms in geo-focused regions. Perhaps the biggest recipient has been ASUS, with the ever popular ZenFone 2 creating headlines when it was announced at $200 with a quad-core Intel Atom, LTE, 4GB of DRAM and a 5.5-inch 1080p display. Though not quite a premium product, the ZenFone 2 was very aggressively priced and earned a lot of attention for both ASUS and Intel over just how many higher-end features were packed into a relatively cheap phone.

Meanwhile, just under two years ago, in order to address the lower-end of the market and to more directly compete with aggressive and low-margin ARM SoC vendors, Intel announced the SoFIA program. SoFIA would see Intel partner with the Chinese SoC vendors Rockchip and Spreadtrum, working with them to design cost-competitive SoCs using Atom CPU cores and Intel modems, and then fab those SoCs at third party fabs. SoFIA was a very aggressive and unusual move for Intel that acknowledged that the company could not compete in the low-end SoC space in a traditional, high-margin Intel manner, and that as a result the company needed to try something different. The first phones based on the resulting Atom x3 SoCs launched earlier this year, so while SoFIA has made it to the market it looks like that presence will be short-lived.

Overall, Intel’s strategy of ‘Time To Market’ in order to generate revenue in a fast paced market makes sense - if you are late, then you are behind on performance, efficiency, and no-one will buy the chips. However, TTM has drawbacks if the chip comes without the features it needs, and the end result has seen Intel always play catch-up in one form or another, hoping that their strategy would encourage customers. Intel got serious about mobile, but it would appear it hasn't been enough.

Intel's Leaving the Trail: Broxton & SoFIA Cancelled

With Intel announcing the cancelation of their entire suite of smartphone SoCs, this has a significant impact on the company's overall strategy. The next generation of Intel's in-house mobile SoCs, Broxton, was lined up to use Intel’s newest generation 14nm Atom core, Goldmont. Goldmont has already been announced at IDF Shenzhen this year as part of the Apollo Lake netbook/low-cost PC platform, but we have been expecting it to arrive as part of a few handsets this year. Despite the fact that we assume Broxton should be in the final stages of silicon development and less than a few months out, the official word from Intel today is that the Broxton commercial platform has been cancelled for both smartphones and tablets, effective immediately. The resources working on the Broxton platform are being moved to areas within the company that offers better returns on investment and are more aligned with Intel’s connectivity (read: 5G) strategy.

Comparison of Intel's Atom SoC Platforms
  Node Release Year Smartphone Tablet Netbook
Notebook
Saltwell 32 nm 2011 Medfield
Clover Trail+
Clover Trail Cedar Trail
Silvermont 22 nm 2013 Merrifield
Moorefield
Bay Trail-T Bay Trail-M/D
Airmont 14 nm 2015 'Riverton' Cherry Trail-T Braswell
Goldmont 14 nm 2016 Broxton
(cancelled)
Willow Trail
(cancelled)
Apollo Lake
Apollo Lake

The other side of this news is the cancellation of the SoFIA 3GX, LTE and LTE2 commercial platforms as well. SoFIA as a platform had missed its original targets, was delayed (some analysts suggest up to a year), and in the end was developed through agreements made with RockChip and Spreadtrum to manufacture some of the SoFIA SoCs for those markets using a less expensive process node but also using the expertise of these two bulk SoC sales companies. We were expecting SoFIA with Intel’s 2nd generation LTE, as well as the next microarchitecture in SoFIA, to be announced this year. As of today’s email exchange with Intel, these programs are now cancelled, again effective immediately.  At this point details on how the arrangements with RockChip and Spreadtrum are unclear (Intel declined to comment).


One of Intel and Rockchip's current SoFIA SoCs

The Road Ahead for Intel

Intel’s announcements over the past week have included layoffs of 12000 staff, but also a clarification of Intel’s future strategy. Among those five focal points include the Cloud, the Client business, Memory and FPGAs, R&D through Moore’s Law, and 5G Connectivity. These five areas are all high margin, high grossing and high volume market segments. Sometimes an introspective look and an internal refocus on the core strengths is a good thing, depending on how your competitors are doing, but that means shedding parts of the business that don’t meet those expectations.

For the moment at least, Intel is out of the SoC side of the smartphone market. This will allow ARM architecture based SoCs to absorb the remaining market share they didn’t have already.

What's less clear at the moment is whether this will also impact the low-cost/non-premium tablet market, as embodied by products such as the Surface 3. In their updated statement, Intel has told us that Broxton is cancelled for both "phones and tablets." Our current understanding is that Broxton is the SoC at the heart of the Willow Trail platform – the successor to the widely used Cherry Trail-T – but at this time Intel has not explicitly confirmed whether this is in fact Willow Trail, or if Broxton's tablet variation represented another platform altogether. Though regardless of what happens with traditional tablets, we'll continue see Intel in more premium tablet-like devices such as 2-in-1s (e.g. Surface Pro) via Apollo Lake and the Core processor lineup, as Intel has previously identified convertable devices as a growth market for the company.

Update 5/02: In a newer statement, Intel has confirmed that Apollo Lake will be offered to tablet manufacturers. At this point it's not clear what the tradeoffs are for that versus Willow Trail, and whether Apollo Lake is suitable for all types of devices that the current-generation Cherry Trail has been used in. But this does mean we will see tablets using the Goldmont CPU core, while Intel Intel will flesh out the rest of their tablet SoCs with Core-based parts. Intel will also "continue to support" their tablet customers with Bay Trail, Cherry Trail, and SoFIA parts.

Also not discussed in greater detail is Intel's future plans for their overall Atom lineup. With Apollo Lake announced just earlier this month, it's clear that Intel's Atom efforts have not been cancelled entirely. We will still see the new 14nm Goldmont cores appear in low-cost PCs under Apollo Lake, most likely in several 11-to-13 inch high volume devices. However for the moment there is not an Atom core on Intel's roadmap beyond Goldmont.

Finally, despite all of this one key target for Intel will be the rest of the discrete modem market, which is currently Qualcomm’s domain, and the late 2015 acquisition of VIA Telecom’s CMDA assets will help. To put some perspective on this, two things: Intel recently hired Dr. Renduchintala, former Qualcomm VP of Mobile, to head up the client business, as well as Amir Faintuch, also formerly Qualcomm, to co-manage Intel’s Platform Engineering Group. Secondly, at Mobile World Congress 2016 in February, Aicha Evans said that she wanted a big contract in 2016, otherwise we might not see her in 2017.

Source: Intel, tip-off from Patrick Moorhead via Forbes

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  • Valantar - Sunday, May 1, 2016 - link

    IoT is a way for manufacturers of various gizmos to add (semi-)useless "functionality" that people usually don't want, that make them far harder to use, and inevitably lead to obsolescence and far earlier replacements, pissing off users even more.

    What's the point of a "smart" LED lightbulb with an estimated life of 20 years, if its platform stops being updated after 2-3 years, and you're no longer able to control it? This same question applies to _every single_ IoT thing imaginable, just replace "LED lightbulb" with kettle/stove/fridge/water heater/radiator/air conditioner/whatever. IoT has no real open standards, and thus lacks any semblance of future proofing.

    Not to mention the bajillion security issues with items like these.

    The buzz about IoT is because it sounds futuristic (it really does!), and it has some potential - given time, open standards, security and future proofing. As of now, it's a market flooded with proprietary, gimmicky junk.
    Reply
  • name99 - Saturday, April 30, 2016 - link

    What do you imagine IoT is?
    A smartwatch is the HIGH end of IoT. IoT requires REALLY low power CPUs. And you imagine that tablet-specced Intel chips are going to play a role? Get real.
    Call me when Intel gets a design win for a smartwatch, or a smartscale, or a fitness tracker.
    Reply
  • Burner73731125975 - Saturday, April 30, 2016 - link

    No, Intel already is claiming to be doing really well financially in IoT and that it will be a major cornerstone of their business in the long-term. I'm saying I don't know where Intel is doing anything noteworthy here. I realize a core i series or atom is way above the power available in watches and most microcontroller applications. But if Intel is making out really well in IoT, what specific products or applications are driving this? Reply
  • name99 - Saturday, April 30, 2016 - link

    "But if Intel is making out really well in IoT, what specific products or applications are driving this?"
    I think lies are driving it. More specifically, I think Intel is trying to deliberately mislead investors by booking any revenue it can as IoT as long as their is some vague connection. Xeon's sold for IoT cloud? Counts as IoT. Modems sold to wireless security systems? Counts as IoT. etc etc

    This may be legal, but it is not informative from the point of view of understanding future technology. That was my point of the design wins I said I wanted to hear.

    (And let's remember that Intel is happy to flat out lie as long as the lie is vague enough that there's no real there there. How long did we hear that Skylake was on track before it was clear that it was actually delayed by about a year? They never actually admitted that; simply claimed that yields were great and it was just that they chose to deliver this tiny dribble of chips for the first six months. Same thing with 10nm; everything was on track until one day it wasn't and we all heard about Koby Lake...)
    Reply
  • shelbystripes - Monday, May 2, 2016 - link

    OK, so you're just a raging anti-Intel fanboy of some sort. Lies? Deliberately misleading investors? Those are serious accusations. Road maps are presented as projections only, and for a reason: No company in its right mind would ever guarantee future performance. Technology setbacks happen, and as a result timetables get pushed back or volumes are constrained for awhile. This isn't new or unique to Intel. AMD/ATI and Nvidia have this problem too. Memory manufacturers announce new SSDs and then are months late supplying the market.

    And with Intel, it's particularly understandable just HOW their assumptions worked. Their "tick-tock" release schedule worked for multiple generations of product, with parallel 2-year development cycles (one focused on core design improvements, one focused on process shrinking the most recent core design). It was obvious to anyone they were assuming that they could achieve a process shrink every two years. Anyone familiar with the technology knows that there are new and greater difficulties with each process shrink due to the laws of physics. I'm not sure how it's a lie or deceptive to say "our goal is to achieve a process shrink every two years" when the risks in that statement are all public knowledge.

    Oh, and it was known that 10nm would be delayed long before Kaby Lake was announced. Way back in February 2015, a year before announcing Kaby Lake, Intel had already pushed its 10nm product launch back to late 2016/early 2017. The Kaby Lake announcement pushed back the 10nm chips a bit further, to late 2017, and introduced a gap filler product to fill the extended product gap. There was no single, sudden "oh we've been way off all this time and didn't tell you" moment like you're claiming.

    Portraying this as some conspiracy to defraud investors is just crazy.
    Reply
  • shelbystripes - Monday, May 2, 2016 - link

    Smartwatches and fitness trackers are compact wearables. These are a very specific category of IoT devices, where size and power are at an absolute premium. And Intel already has a solid product on the market with an embedded Atom CPU. Basis Peak is a connected watch/fitness tracker that has gotten pretty good reviews. It's not perfect, but neither is any other fitness tracker out there. The point is, it's obviously something that works today.

    But IoT isn't just about smartwatches and fitness trackers at all. Like I already mentioned, Intel announced an embedded solution for automotive applications. Connected vehicles are the next big thing, and automotive designers can afford to use a 2W tablet-class SoC instead of a 0.5W smartphone SoC. In 2015 there were 17M smartwatches sold, but more than half were Apple Watches with in-house ARM CPUs, and most of the rest were lower-cost, lower-margin parts. There's not much room for Intel to grow into there at the moment. But there were 16.5M vehicles sold in 2015, and that's a wide-open market. Integrated connectivity systems are currently premium upgrades or luxury standard features, making an Atom SoC with integrated LTE an ideal platform with potential for profitability. If Intel rolls out a version with integrated Intel HD graphics, then it has an all-in-one SoC solution that can fully power the built-in infotainment system as well.

    This is the market Intel is looking at now. Automotive, industrial, medical, and commercial applications where the SoC is a relatively small part of the system price, making it easier to absorb the premium price Intel wants for a high-performance IoT product. Intel is going to focus on those things for now--but when those things can also downscale to tablets and maybe even phablets, you'll see Intel staying in that market too, if only at the high end.
    Reply
  • lorribot - Saturday, April 30, 2016 - link

    I desperately went an a Windows phone with continuum that can run all my old crappy Windows apps (like RSAT), that means a full copy of Windoows which needs x86 instructions, Intel could do this and blow the Business Phone market wide open or they could not bother, go away and sulk because no one wants to play with their ball any more. Reply
  • Burner73731125975 - Saturday, April 30, 2016 - link

    Most business users don't even know what x86 is. The major desktop programs have all been brought to phones and tablets in at least some form. Tech nerds like us like the idea, but we aren't about to drive the market. Reply
  • ET - Sunday, May 1, 2016 - link

    I'm sorry to read this. A phone that can double as a PC is the only somewhat exciting future development I can see in PC space. Now the only phones that could be converted to "PC's" would be ARM based, and that's not nearly as exciting. Reply
  • Murloc - Sunday, May 1, 2016 - link

    Remix OS is an interesting development in this regard. It's a full-desktop Android fork.

    So what you're saying can still happen, but on ARM + Android.
    Reply

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