Intel Gets a Helping ARM
The licensing agreement doesn’t change our fair value estimate for the chip giant, however.
Intel (INTC) made a flurry of announcements at its developer forum last week that have far-reaching implications across the semiconductor landscape. The most important news for the chip leader, in our view, is that Intel will license technology from ARM Holdings (ARMH) so it can offer foundry customers access to ARM’s physical intellectual property at the 10-nanometer process node. This will allow Intel to compete with Taiwan Semiconductor Manufacturing’s (TSM) and Samsung’s foundries for business from the likes of Qualcomm (QCOM) and Apple (AAPL).
Second, Intel announced that LG Electronics will be a new foundry customer for the 10-nanometer internally developed chips for its phones. This has negative repercussions for Qualcomm, which counts LG as an important customer. The news isn’t especially shocking, however, as LG was long rumored to be building its own processor business, and we anticipate that ongoing vertical integration will weigh on Qualcomm’s chip business.
Abhinav Davuluri does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.