Intel's toughest year starts now

2014 is a do-or-die year for CEO Brian Krzanich as his company struggles to finally succeed in the mobile market

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The 64-bit race is where Intel will need to borrow -- and fire
What's more, Intel has completed work on a 64-bit version of Android OS for x86 smartphones, and the software will be ready to load on smartphones with its upcoming Atom 64-bit chip code-named "Merrifield."

Apple leaped ahead last year when the iPhone 5s and iPad Air shipped with the 64-bit A7 ARM chip inside. "Now the question is who will build the first 64-bit Android tablet. Intel has the silicon and the software; the trick is finding a partner to do it with Android," says Brookwood.

Assuming it executes well, Intel has a shot at the tablet market, says McCarron. But what makes it especially difficult is that two-thirds of the market for tablet chips is locked up by Apple and Samsung, two companies that make or design their own chips. Intel does have something in its favor, McCarron says: its strong ties to PC makers like Hewlett-Packard, Dell, and Lenovo, likely customers when they produce Android tablets. In fact, some of their recent Android tablets use Intel chips.

Kraznich's goal: Increase sales of tablet chips from last year's total of 10 million to 40 million units this year.

What will be borrowed? Manufacturing capacity from TSMC. It's not that Intel doesn't have the room in its vast fleet of fabrication plants or the needed skills in chip-process technology. The problem is time to market, says Brookwood: It can't convert them to the new chip designs and ramp up production fast enough. Instead, it will pay TSMC to build SoFIA chips in the meantime.

Finally, there's "something fired." Although Intel argues it isn't firing 5,000 people, it is reducing its workforce of 108,000 by 5 percent through a variety of means that could include attrition, voluntary retirements, and so on. Intel didn't say where the jobs would be cut, but the loss of 5,000 jobs is no small matter. The reason it's reducing jobs is because it's selling fewer high-margin PC chips and not selling enough low-margin mobile chips to make up the difference.

Winning in the mobile (that is, smartphones and tablets) market has so far eluded the old Wintel duopoly, and it may well have pushed Microsoft CEO Steve Ballmer into early retirement. I'm not predicting the same fate for Krzanich, but quadrupling sales of tablet chips while entering new markets and holding on to a fading one is one hell of a challenge. It will take at least a year to see how this shakes out.

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This article, "Intel's toughest year starts now," was originally published by Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at For the latest business technology news, follow on Twitter.

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