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1 Feature Intel Corp. Needs to Add to Upcoming Low-Cost Processors

Later this year, chip giant Intel (NASDAQ: INTC) is expected to release a new family of low-cost processors, called Gemini Lake. These chips should power low-cost notebook and desktop PCs, and it's even likely that the basic design will be adapted to service many of the Internet of Things applications, like in-vehicle infotainment, that Intel is going after.

Gemini Lake chips offer improved performance over their predecessors, as well as increased technology integration. However, there's one big technology that Intel didn't integrate into Gemini Lake but would be well served to add to the follow-on to Gemini lake: LTE support.

Image source: Intel.

Integrated LTE is the last piece of the puzzle

Intel rival Qualcomm (NASDAQ: QCOM) is being quite vocal about bringing its smartphone-oriented Snapdragon processors into the personal-computer market. One key competitive advantage that Qualcomm talks about relative to Intel's offerings in the notebook market is that Qualcomm's chips integrate LTE, while Intel's don't.

This means that for LTE-enabled laptops, an Intel-based solution is going to be less power and space efficient than the Qualcomm solution, since the Intel-based solution would require a standalone LTE chip.

To close this competitive gap, Intel needs to integrate a capable LTE modem into its future low-cost processors.

Intel's in luck

I suspect the main reason Intel hasn't offered such an integrated part is that while the company builds its processors using its own chip-manufacturing technology, it has built its cellular modems on third-party manufacturing technology. It's not possible to integrate two different chips built with two different manufacturing technologies onto a single piece of silicon.

Next year, however, Intel is expected to launch a cellular modem known as the XMM 7560. This is expected to be Intel's first cellular modem that's manufactured using Intel's own 14nm technology rather than a third-party technology. It's not hard to imagine a next-generation low-cost personal-computer processor that comes with an XMM 7560-derived modem integrated inside.

Now, not every computer that'd use such a next-generation Atom processor would sell with LTE capability enabled. So, in some cases, Intel would be selling a more expensive-to-build chip than it'd need to.

Image source: Intel.

To get around this problem, Intel could potentially offer two variants of the chip: one with an LTE modem built-in and one without. And it could charge more for the LTE-capable model. This would require that Intel make a larger up-front investment to build two different versions of the chip, but such an investment could pay off in the form of higher gross profit, since the lower-priced chip would also be cheaper to make.

The point, though, is that next year, Intel may finally offer personal-computer chips that have the same level of integration as high-end mobile processors. Such integration should improve Intel's competitive positioning against Qualcomm in some portion of the personal-computer market. It could also allow Intel to extract more value from the chips it sells, particularly if it can charge a premium for chips with integrated LTE capability.

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Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool owns shares of Qualcomm. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.