Intel's Moving Fast to Counter Qualcomm's PC Threat
Chip giant Intel (NASDAQ: INTC) launched the first of its Core Ultra laptop CPUs, codenamed Meteor Lake, last December. Meteor Lake brought a bunch of changes all at once:
It moved to a disaggregated architecture, with the chips split into tiles that each use a different manufacturing process.
The compute tile marked the debut of the Intel 4 process, the second of five process nodes that are part of Intel's plan to retake manufacturing leadership.
Meteor Lake chips include a built-in AI processor, a first for Intel in the PC market.
Meteor Lake chips are packaged using Intel's Foveros advanced packaging technology.
Competition comes to the laptop market
While Meteor Lake was a big step forward for Intel, a new competitor will give Intel a run for its money this year. Laptops powered by Qualcomm's (NASDAQ: QCOM) Arm-based processors are set to arrive in June from all the major PC OEMs as well as from Microsoft itself. Previous attempts to bring the Arm architecture to Windows have failed miserably, but this time looks different.
Qualcomm's new Snapdragon X Elite and Snapdragon X Plus processors are fast and efficient. While full benchmarks of Qualcomm-powered devices aren't yet available, early benchmarks indicate that the Elite X often outperforms Meteor Lake and even Apple's M3 chip in CPU-heavy tasks. The Elite X chip reigns supreme in AI workloads thanks to its powerful AI processor, running circles around Meteor Lake.
A software emulation layer will handle backward compatibility, enabling legacy Windows applications built for x86 processors to run on Qualcomm-powered devices. Emulation always introduces a performance penalty, but Qualcomm's chips may be powerful enough for this penalty to be unnoticeable by end users.
Qualcomm's chips also enable significant improvements in battery life. Qualcomm claims that some laptops will be capable of delivering multiple days of battery life, although we'll have to wait for third-party reviews to see if that claim holds water.
Waking a sleeping giant
Up until 2017 or so when rival AMD began its comeback, Intel dominated the PC CPU market and had little reason to push the envelope. Chronic manufacturing delays didn't matter for years as its market share hovered in monopoly territory.
Those days are now over, and Intel under CEO Pat Gelsinger knows it. Not only is AMD gaining market share, but Qualcomm and eventually other Arm-based CPU companies are coming for the PC market.
Less than a year after launching Meteor Lake, Intel plans to bring its successor to market, an extremely fast cadence for Intel considering all the improvements coming. Intel's Lunar Lake chips will start shipping to OEMs in the third quarter, early enough to ensure plenty of systems are available for the holiday season.
Lunar Lake uses a similar disaggregated architecture as Meteor Lake. The CPU tile is expected to be manufactured using the Intel 20A process, although that hasn't been confirmed, the penultimate process node in Intel's 5-node plan. Intel 20A will bring a new transistor design and backside power delivery, the latter of which can deliver meaningful efficiency gains. Foundry leader TSMC won't have backside power delivery until 2026.
Lunar Lake will come with a supercharged AI processor, more than tripling the AI compute capacity of Meteor Lake. Upgraded graphics will contribute more AI horsepower, and Intel's work on its AI software ecosystem could give it an edge.
Intel can't afford to move slowly with competition brewing in the PC CPU market. Meteor Lake chips are selling well, although capacity constraints are currently hindering sales. However, Meteor Lake may be outclassed by Qualcomm's new chips once they launch. Thankfully, Intel will have an answer before the end of the year with Lunar Lake.
Intel may never be as dominant as it once was in the PC CPU market as Arm-based chips gain a foothold, but if the company can maintain its momentum and bring new architectures to market and new manufacturing processes online in quick succession, it can remain the market leader in the age of the AI PC.
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Timothy Green has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Microsoft, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
