--Battle is intensifying in the computer processor chip market
ahead of the launch of new Windows 8 operating system
--PC processor giant Intel and ARM Holdings, which designs
processors for smartphones and tablets, are expanding into each
other's market
(Rewrites throughout, adding comments from ARM Holdings)
By Lorraine Luk
TAIPEI--Behind personal computer makers' race to prepare tablets
and PCs that run on Microsoft Corp.'s (MSFT) next-generation
Windows 8 operating system, another battle is intensifying among
companies that design processor chips powering those devices.
On one side is Intel Corp. (INTC) of the U.S., which has long
dominated the market for processors used in PCs and computer
servers. On the other side is U.K.-based ARM Holdings PLC (ARMH),
which has risen to fame with its low-power mobile processors that
are used in most smartphones and tablets, including Apple Inc.
(AAPL) products.
Their battle is likely to escalate with Microsoft's latest OS
makeover, as Windows for the first time becomes compatible with ARM
processors with a version of Windows 8. At the same time, Windows
8, which has an interface optimized for touch-screen use, may give
Intel an opportunity to gain more presence in the tablet
market.
ARM and Intel have been trying to expand in each other's market,
with ARM chips making a push into PCs and servers while Intel
increases its focus on smartphones and tablets.
ARM Chief Operating Officer Graham Budd said in an interview
Tuesday that the first ARM-based computer server will hit the
market by the end of this year, and the company aims to grab as
much as 10% of the server chip market by 2016. He said that Dell
Inc. (DELL) and Hewlett-Packard Co. (HPQ) are testing server chips
designed by ARM.
The traditional PC industry, where Intel processors remain
dominant, has seen only modest growth in recent years, with
consumer demand for gadgets shifting more to tablets and
smartphones powered by ARM processors.
ARM doesn't build chips itself but designs processor technology
that it licenses to companies such as Qualcomm Inc. (QCOM) and
Nvidia Corp. (NVDA).
To secure its own market, Intel has been promoting Ultrabooks, a
category it invented last year for a new breed of thin, lightweight
laptops. Intel makes the key processors that power Ultrabooks.
Ultrabook sales have so far failed to gain momentum, but Intel
expects this still-nascent market segment to find a broader
audience when PC makers later this year release touch-screen
Ultrabooks running on Windows 8.
To create a new market for touch-enabled Ultrabooks, Intel said
Tuesday that it has agreed to help fund several touch-screen
makers' investment on additional production capacity.
Intel said it has reached financial agreements with four
Taiwanese touch-screen makers--Wintek Corp. (2384.TW), TPK Holding
Co. (3673.TW), HannsTouch Solution Inc. and Cando Corp. (8056.OT).
Intel declined to give details on how much money it will provide or
the specific costs it will help shoulder.
"Intel believes that touch capability is a key component to the
Ultrabook experience," said senior vice president Tom Kilroy in an
interview this week.
Intel is counting on Windows 8 to help stimulate demand for
Ultrabooks as well as other PCs in the second half.
ARM, meanwhile, now sees an opportunity to work with traditional
PC makers that have long been using Intel processors, thanks to
Windows RT, a version of Windows 8 that supports ARM-based
processors.
Taiwanese PC maker Asustek this week showed a Windows RT-based
tablet with an ARM-based processor made by Nvidia, and said it
plans to launch it in the fourth quarter.
Ujesh Desai, Nvidia's vice president of product marketing, said
in an interview Tuesday that the new Windows operating system could
also enable the company take on Intel in the market for
Ultrabooks.
Mr. Desai said prices for thin, lightweight laptops that run on
the Windows RT operating system with Nvidia's ARM-based Tegra
processors could be as low as $499. The average price for
Ultrabooks with Intel processors is about $800, and Intel is trying
to lower the price to $699 by the end of this year.
-Juro Osawa contributed to this article.
Write to Lorraine Luk at lorraine.luk@dowjones.com