The largest PC/laptop processor manufacturer is ramping up to enter the mobile market. After posting less than satisfactory earnings, Intel says that it will invest $13 billion into research and development in hopes of gaining ground in the expanding mobile market.
Intel released its quarterly earnings last Thursday, with results dropping below expectations. Intel posted earnings falling short of its $13.6 billion revenue projections, only taking in $13.5 billion in Q4 of 2012. Overall for the year, Intel’s revenue dropped 1.2% lower than in 2011, at $53.3billion.
Despite the lower-than-expected earnings, Intel plans to invest more money into its research and development. The company announced that it will invest $13 billion into R&D in 2013, compared to $10.15 billion in 2011 and $8.35 billion in 2011. However, according to Bloomberg analysts, Intel is expected to invest $10 billion, not the $13 billion that it originally announced.
Intel has noted that the new influx of capital will be used to help further develop its mobile processor line. As the current largest desktop and computer processor manufacturer, Intel is looking find new potential markets with the PC and notebook markets in steady decline.
Gaining ground in the competitive mobile market will be a challenge for Intel, as only seven smartphones currently use an Intel processor. Nevertheless, the true challenge for Intel will be reducing costs and power consumption, two things the company has not had to worry about as a maker of high-end processors for PCs.
At CES, Intel announced that it would release new processors for both smartphones and tablets in the second half of 2013. While these new chips will be a good start, if Intel wants to make a serious play at the mobile market, it will have to make partnerships with big smartphone manufacturers. Intel’s best bet will be to aim for Samsung or Apple, as both companies currently use ARM-based processors.
Intel’s earnings will likely suffer a result of its attempts to enter new markets. The company itself predicts revenue will be up between 5% and flat in 2013. While the earnings may not be all that exciting for Intel this year, 2013 will mark a major turning point for the company.
Be sure to read our hands-on review of the Lenovo K900 Intel-based smartphone from CES 2013.