Could the Chip Battle for Tablets Get Graphic?

INDUSTRY REPORT: Which chipmakers could win or lose the motherboard grab for tablet space?

Brian Colello, CPA 27 January, 2011 | 10:25AM
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Ever since the release of Apple's (AAPL) iPad in April 2010, gadget lovers have been buzzing about tablets. This new category of electronic devices is composed essentially of hybrids between a PC and a smartphone. At this month's Consumer Electronics Show (CES), a host of upcoming tablets stole the spotlight, and the kings and queens of the dance were the semiconductor firms that make the processors which will power these devices. Here's a quick look at the chipmakers at the centre of the burgeoning tablet hype.

Tablets: The Latest Battleground in Tech
There's no question that firms in both the PC and handset supply chains are on a collision course in the tablet space. These devices hope to combine the processing power and productivity functions of a low-end PC with the all-day battery lives and touch screen interfaces seen in today's most popular smartphones. In the chip space, the battle comes down to Intel (INTC) and its x86 processors versus ARM Holdings (ARM) and its line of Cortex architectures used in the mobile space. There has traditionally been a clear line of demarcation between these two firms. Intel rules the PC processor business because of its manufacturing expertise, massive research-and-development staff, and well-publicised "Wintel" alliance with Microsoft (MSFT), the predominant PC operating system. Meanwhile, ARM-based processors are prevalent in the handset industry because these chips are ultra-low power, allowing mobile phones to run for days, rather than the 2-to-4 hour battery lives within laptops. ARM essentially develops the architecture for these low power chips, while today's leading chipmakers, like Qualcomm (QCOM), Texas Instruments (TXN) and Nvidia (NVDA), expand upon these blueprints to develop their proprietary handset processors. The tablet market is a one-horse race at the moment, with the iPad in the lead, and ARM as the jockey along for the ride, as the iPad uses an ARM-based A4 processor developed by Apple, and manufactured by Samsung (SMSD). Yet, a host of PC and handset competitors are working on the latest iPad killer, and most of the processors in these tablets are ARM-based as well.

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About Author

Brian Colello, CPA  is a senior stock analyst with Morningstar.

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