Intel might stop mobile subsidies

Market watchers have speculated that Intel will stop providing subsidies for its mobile device solutions to eliminate losses from the business; however, sources from PC players believe Intel is likely to continue offering subsidies to some of its larger clients, such as Asustek Computer, through different methods in order to maintain orders.

Asustek responded by stating it does not comment on market speculation, while Intel said that the company's has not announced specific timing for the discontinuation of contra revenues for the mobile segment, but is now focused on cost reduction for both the platform and the overall platform BOM. Intel is adding SoCs (SoFIA) that are designed specifically for the segment to its roadmap and expects related product- and bill of materials-costs to decline meaningfully as new, more cost-competitive products are introduced.

The sources pointed out that Intel has been aggressively providing subsidies and assistance on technology and marketing to first-tier brand vendors as well as white-box players in China, looking to expand its share in the mobile device market. Asustek is currently the largest client of Intel's handset and tablet platforms.

In 2014, Asustek placed orders for over 7.5 million Atom processors with Intel for its ZenFone- series smartphones. Including orders for its MeMO Pad 7/8, Transformer Pad, Fonepad, Windows 8-based tablets, T100 2-in-1 and PadFone X mini, Intel received at least 15 million CPU orders from the Taiwan-based vendor in the year.

The sources believe that Intel is mainly stopping its subsidies to China's white-box players as its cooperation with Tsinghua Unigroup should no longer require the CPU giant to promote its products in China.

Spreadtrum Communications, a CPU subsidiary of Tsinghua, will develop x86-based SoCs jointly with Intel and will also be responsible for selling the CPUs in China. With Spreadtrum's existing channels and clients, Intel will not need to offer subsidies to attract partners in China.

Since orders from first-tier brand vendors are still handled by Intel, the sources believe that the CPU maker is unlikely to risk losing high-volume orders from these clients.

The sources pointed out that Asustek is expected to ship at least 15 million ZenFone smartphones in 2015. Asustek is set to announce its second-generation ZenFone-series devices in the first quarter of 2015. Via digitimes.