With the news that Qualcomm will take over the CES keynote spot previously held by Microsoft, it really became clear what a dominant player the company has become. Quietly, while no one was paying attention, it's become the second-most important semiconductor maker in the U.S.
I didn't attend the Intel Developer Forum, but some reports out of the show presented an interesting take on things from people who worked the floor and talked to Intel engineers. Namely, that Intel no longer views AMD as its main rival. That honor now goes to Qualcomm.
It's a darned shame, but the writing is on the wall for AMD. The ATI graphics business is the only thing keeping it afloat right now as sales shrivel up and the company faces yet another round of staffing cuts. You can only cut so many times before there's no one left to innovate you out of the mess you're in.
Qualcomm started life in 1985 as a maker of cellular communications semiconductors, and it hasn't strayed far from that formula. It's pretty much the go-to company for CDMA chips and is now taking a lead in 4G LTE as well. So why would a company that's so vertical become Intel's biggest competitor? Because of where the two are headed.
Intel has the desktop/laptop and server markets sewn up tight now and wants to get into mobile. It desperately wants to make inroads to the smartphone and tablet markets, and despite a number of generations of Atom processors, it's not getting very far.
Qualcomm, on the other hand, dominates this space, and it has the chips to back it up. The Snapdragon line of ARM-based processors alone is found in a ridiculous number of prominent devices, including Samsung Galaxy S II and S III, Nokia Lumia 900 and 920, Asus Transformer Pad Infinity and the Samsung Galaxy Note. Mind you, Samsung is also in the ARM processor business, yet it is licensing Qualcomm's parts. That’s quite a statement.
Qualcomm also showed success where AMD failed. It bought a mobile graphics unit from AMD, which came as part of the ATI acquisition, for $65 million in 2009. That unit became Qualcomm's Adreno line of mobile GPUs.
Word around the blogs is that Texas Instruments, an ARM OEM with its own line of processors called OMAP, is looking to back out of the heated mobile chip market and focus on areas where it is strongest. With a giant like TI backing down, that just clears more room for Qualcomm and Intel to fight it out.
Qualcomm has its challenges, not the least of which is that the company is fabless. That means it's at the mercy of TSMC to get its product to meet demand, and TSMC has proven abysmal when it comes to that. Jen-Hsun Huang of Nvidia has been complaining about TSMC's inability to provide adequate supply for so long I'm amazed he hasn't built his own fabs.
And Intel? It has no problem here. It has all the fab capacity it needs and does it at a much smaller manufacturing process. This will play a role in competition.
The question then falls to where Microsoft fits into all of this. Microsoft and Intel were BFFs until recent years, and no doubt the relationship was not helped by the comment from Intel chief Paul Otellini that Windows 8 was not ready.
Microsoft is sitting on a potentially winning strategy of supporting ARM and x86 equally. Clearly, Intel would benefit more from this, but if Qualcomm sees an opening to get closer to Microsoft, it could and should take it.