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Mobile Chips Threaten High-Performance Manufacturers


At the end of 2009, Intel was shipping about 80 percent of all x86 processors--the type of chip that powers, for example, Windows-based personal computers. AMD accounted for nearly all the rest of the $28 billion market. But that market grew at a relatively modest rate of 2.5 percent last year, according to analyst firm IDC, restrained by lackluster sales of desktop computers.

Much of the real growth in microchips is coming from the explosion in mobile computing; netbooks and smart phones use both x86 and non-x86 chips. The challenges of designing chips for these devices, is rapidly redefining the industry, leaving Intel and AMD open to new competition.

In the past, the kinds of processors found in cell phones could not rival the performance of those found in personal computers. To surf multimedia websites or use a broad range of applications, you needed a laptop or desktop. Intel and AMD entrenched themselves in this market, where high barriers to entry contribute to profit margins that are higher than they are in the rest of the semiconductor industry: any potential competitor that wanted to make x86 chips for personal computers would have to sink billions into new fabs (see "The High Cost of Upholding Moore's Law").

From Technology Review
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